Patient Protection and Affordable Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions
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Final rule.
CFR Part: "45 CFR Parts 155 and 156"
RIN Number: "RIN 0938-AR68"
Citation: "78 FR 39494"
Document Number: "CMS-9958-F"
"Rules and Regulations"
SUMMARY: This final rule implements certain functions of the Affordable Insurance Exchanges ("Exchanges"). These specific statutory functions include determining eligibility for and granting certificates of exemption from the individual shared responsibility payment described in section 5000A of the Internal Revenue Code. Additionally, this final rule implements the responsibilities of the Secretary of
   EFFECTIVE DATE: Effective Date: These regulations are effective on
   FOR FURTHER INFORMATION CONTACT:
   SUPPLEMENTARY INFORMATION: To ensure effective and efficient implementation of the insurance market reforms, the Affordable Care Act requires a nonexempt individual to maintain minimum essential coverage or make a shared responsibility payment. The Affordable Care Act specifies the categories of individuals who are eligible to receive exemptions from the individual shared responsibility payment under section 5000A of the Internal Revenue Code (the Code), which provides nonexempt individuals with a choice: maintain minimum essential coverage for themselves and any nonexempt family members or include an additional payment with their federal income tax return. Some individuals are exempt from the shared responsibility payment, including members of recognized religious sects whose tenets conflict with acceptance of the benefits of private or public insurance and those who do not have an affordable health insurance coverage option available. Section 1311(d)(
   This final rule sets forth standards and processes under which the Exchange will conduct eligibility determinations for, and grant certificates of exemption from, the individual shared responsibility payment. Furthermore, it supports and complements rulemaking conducted by the Secretary of the Treasury with respect to section 5000A of the Code, as added by section 1501(b) of the Affordable Care Act. The intent of this rule is to implement the relevant provisions while continuing to afford states substantial discretion in the design and operation of an Exchange, with greater standardization provided where directed by the statute or where there are compelling practical, efficiency, or consumer protection reasons.
   Under section 5000A(f)(1)(E) of the Code, the Secretary of the
Table of Contents
Executive Summary
I. Background
   A. Legislative Overview
   B. Stakeholder Consultation and Input
   C. Alignment With Related Rules and Published Information
II. Provisions of the Regulation and Analysis of and Responses to Public Comments
   A. Part 155--Exchange Establishment Standards and Other Related Standards Under the Affordable Care Act
   1. Subpart A--General Provisions
   a. Definitions (
   2. Subpart C--General Functions of an Exchange
   a. Functions of an Exchange (
   3. Subpart G--Exchange Functions in the Individual Market: Eligibility Determinations for Exemptions
   a. Definitions and General Requirements (
   b. Eligibility Standards for Exemptions (
   c. Eligibility Process for Exemptions (
   d. Verification Process Related to Eligibility for Exemptions (
   e. Eligibility Redeterminations for Exemptions During a Calendar Year (
   f. Options for Conducting Eligibility Determinations for Exemptions (
   g. Reporting (
   h. Right To Appeal (
   B. Part 156--Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges
   a. Definition of Minimum Essential Coverage (
   b. Other Types of Coverage That Qualify as Minimum Essential Coverage (
   c. Requirements for Recognition as Minimum Essential Coverage for Coverage Not Otherwise Designated Minimum Essential Coverage in the Statute or This Regulation (
   d.
III. Provisions of the Final Regulation
IV. Collection of Information Requirements
V. Summary of Regulatory Impact Statement
VI. Regulatory Flexibility Act
VII. Unfunded Mandates
VIII. Federalism
IX. Congressional Review Act
Regulation Text
Abbreviations
Affordable Care Act--the Affordable Care Act of 2010 (which is the collective term for the Patient Protection and Affordable Care Act (Pub. L. 111-148) and the Health Care and Education Reconciliation Act (Pub. L. 111-152))
BHP Basic Health Program
CHIP
FPL Federal Poverty Level
IRS
QHP Qualified Health Plan
SSA
SSN Social Security Number
Code Internal Revenue Code of 1986, as Amended
I. Background
A. Legislative Overview
   Section 1501(b) of the Affordable Care Act added section 5000A of the Internal Revenue Code (the Code) to a new chapter 48 of subtitle D (Miscellaneous Excise Taxes) of the Code effective for months beginning after
   Section 1311(d)(
   Section 1321 of the Affordable Care Act discusses state flexibility in the operation and enforcement of Exchanges and related requirements. Section 1321(a) of the Affordable Care Act provides broad authority for the Secretary to establish standards and regulations to implement the statutory requirements related to Exchanges and other components of title I of the Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010. Section 1311(k) of the Affordable Care Act specifies that Exchanges may not establish rules that conflict with or prevent the application of regulations promulgated by the Secretary under Subtitle D of title I of the Affordable Care Act.
   In accordance with our interpretation of these sections of the Affordable Care Act, and the authority provided by, inter alia, section 1321(a) of the Affordable Care Act, we specify that under the program established under section 1411(a)(4) of the Affordable Care Act, the Exchange will determine eligibility for and grant certificates of exemption as described below. We also note that consistent with prior guidance, in the State Exchange Implementation Questions and Answers released by HHS on
   FOOTNOTE 1 State Exchange Implementation Questions and Answers, published
   FOOTNOTE 2 Frequently Asked Questions on Exchanges, Market Reforms, and
   On
   Section 5000A(f) of the Code designates certain types of coverage as minimum essential coverage. The term "minimum essential coverage" includes all of the following under the statute: Government sponsored programs (the
B. Stakeholder Consultation and Input
   On
   The public response to the RFC yielded comment submissions from consumer advocacy organizations, medical and health care professional trade associations and societies, medical and health care professional entities, health insurers, insurance trade associations, members of the general public, and employer organizations. The majority of the comments were related to the general functions and standards for Exchanges, qualified health plans (QHPs), eligibility and enrollment, and coordination with
   In addition to the RFC, HHS received comments on the proposed rule titled "Patient Protection and Affordable Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions" (78 FR 7348) that are, similarly not separately identified, but incorporated into each substantive section of this final rule. HHS has also consulted with stakeholders through regular meetings with the
C. Alignment With Related Rules and Published Information
   The proposed rule, titled "Patient Protection and Affordable Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions" (78 FR 7348), was published in the
II. Provisions of the Regulation and Analysis of and Responses to Public Comments
   On
   We received approximately 220 public comments from state agencies, advocacy groups, health care providers, employers, health insurers, health care associations, and others. The comments ranged from general support or opposition to the proposed provisions to very specific questions or comments regarding the proposed rules.
   Some comments were outside the scope of the proposed rule, and therefore are not addressed in this final rule. In some instances, commenters raised policy or operational issues, such as those related to certified application counselors, authorized representatives, and eligibility appeals, that will be addressed through forthcoming regulatory and subregulatory guidance to be provided subsequent to this final rule; therefore, some, but not all comments are addressed in the preamble to this final rule.
   Brief summaries of each proposed provision, a summary of the public comments we received (with the exception of specific comments on the paperwork burden or the regulatory impact analysis), and our responses to the comments are below. Comments related to the paperwork burden are addressed in the "Collection of Information Requirements" and section in this final rule. We did not receive comments related to the impact analysis.
A. Part 155--Exchange Establishment Standards and Other Related Standards Under the Affordable Care Act
1. Subpart A--General Provisions
a. Definitions (
   We proposed to make a technical correction to the definitions of "applicant" and "application filer" to note that they do not apply to an applicant or application filer seeking an exemption pursuant to proposed subpart G. We proposed separate definitions specific to exemptions for these terms in
   Comment: Several commenters expressed concerns about HHS' pre-existing definition of "application filer" in
   Response: The commenters correctly describe different situations in which recognition of relationships is determined by who can enroll in a QHP together. In proposing to amend the definition of "application filer" in
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
2. Subpart C--General Functions of an Exchange
a. Functions of an Exchange (
   In paragraph (a), we proposed to add that the Exchange would also perform the minimum functions described in subpart G of this part related to eligibility determinations for exemptions.
   Comment: Commenters generally supported our proposal that the Exchange would also perform the minimum functions described in subpart G of this part related to eligibility determinations for exemptions. Some commenters raised concerns that the HHS proposed rule and the Treasury proposed rule discussed different issues, and wanted to ensure that both agencies were working in close coordination. Other commenters expressed opposition to Exchanges determining eligibility for exemptions based on overarching philosophical complaints regarding this proposed rule and this provision of the Affordable Care Act. One commenter wanted HHS to reduce the number of exemptions available to individuals. Lastly, another commenter believed that HHS was providing too much latitude to states in determining the basic framework for Exchanges, and rather should set more strict guidelines to prevent confusion for Exchanges and consumers.
   Response: We continue to coordinate closely with the
Summary of Regulatory Changes
   We are finalizing the provision proposed in
3. Subpart G--Exchange Functions in the Individual Market: Eligibility Determinations for Exemptions
a. Definitions and General Requirements (
   In paragraph (a) of
   We proposed to define "exemption" as an exemption from the individual shared responsibility payment, noting that there is no meaningful distinction between individuals exempt from the shared responsibility payment and individuals who are not "applicable individuals" for purposes of the requirement to maintain minimum essential coverage in section 5000A of the Code.
   We proposed to define "health care sharing ministry" in the same manner as provided in 26 CFR 1.5000A-3(b) of the Treasury proposed rule.
   We proposed to define "required contribution" in the same manner as provided in 26 CFR 1.5000A-3(e) of the Treasury proposed rule.
   We proposed to define "Indian tribe" in the same manner as in 26 CFR 1.5000A-3(g) of the Treasury proposed rule, which in turn references the definition in section 45A(c)(6) of the Code.
   In paragraph (b), we proposed that for purposes of this subpart, any attestation that an applicant is to provide under this subpart may also be provided by an application filer on behalf of the applicant.
   In paragraph (c) of
   We also proposed to add paragraphs (d) and (e) in order to specify that the accessibility and notice requirements in
   Comment: One commenter raised concerns about health care sharing ministries. The commenter noted that health care sharing ministries are not subject to state insurance laws, and as such, the statutory exemption for members of health care sharing ministries may create circumstances in which an individual who is a member of a health care sharing ministry does not benefit from the Affordable Care Act's broader consumer protections. The commenter believed that this might motivate organizations to seek to establish standing as a health care sharing ministry in order to evade consumer protections and market reforms enacted by the Affordable Care Act. The commenter advised HHS and
   Response: The Affordable Care Act defines health care sharing ministry for purposes of an exemption in section 5000A(d)(2)(B) of the Code. We appreciate the concerns raised regarding organizations that may improperly seek standing as a health care sharing ministry. As we discuss further below, we believe that the process discussed in
   Comment: Commenters generally supported allowing an application filer to attest for an applicant on the exemptions application. However, one commenter believed that "attestation" was not defined clearly enough in
   Response: The proposed language regarding attestations in
   Comment: Several commenters requested that HHS ensure that the application process, including eligibility notices, be accessible to individuals with limited English proficiency (LEP) as well as those individuals with disabilities. Commenters also urged HHS to include clearer guidelines regarding the exemption eligibility process in order to ensure that the processes do not discriminate against individuals, particularly LEP individuals. Commenters requested translation of the requisite materials in non-English languages, and suggested that HHS refer to LEP guidance adopted by the
   Response: We appreciate commenters' concerns regarding ensuring that the application process and eligibility notices are accessible to individuals with LEP as well as those individuals with disabilities. In proposed
Summary of Regulatory Changes
   We finalize the provisions proposed in
b. Eligibility Standards for Exemptions (
   Under the program established in accordance with section 1411(a)(4) of the Affordable Care Act for determining whether certificates of exemption are to be issued by Exchanges under section 1311(d)(
   In paragraph (a) of
   We noted that an applicant could apply for multiple exemptions simultaneously in case some are denied, and also receive any exemptions for which he or she is eligible. We solicited comments on this approach.
   In paragraph (b), we proposed that except as specified, an applicant is required to submit a new application for each year for which an applicant wants to be considered for an exemption through the Exchange, and that an exemption will only be provided for a calendar year in which the applicant submitted an application for an exemption. We provided exceptions for exemptions provided based on membership in an Indian tribe and for religious conscience, in recognition that an individual's qualification for these exemptions is expected to remain the same from year to year. We also specified an exception for hardship, since some categories of hardship will be provided for one or more months and may be provided for periods of time that stretch across more than one calendar year, and some categories of hardship can only be provided after the close of a calendar year. We welcomed comments on this approach and how the Exchange could expedite and streamline the process.
   We considered whether to specify that the Exchange send a notice to each individual who had an exemption certificate from the Exchange for a calendar year, in order to remind him or her about the opportunity to apply to for an exemption for the following calendar year, and whether this notice could be sent only at the individual's direction. We solicited comments regarding the use of such a reminder and on a renewal process more generally.
   In paragraph (c), we proposed to codify the statutory eligibility standards for the exemption based on religious conscience. In paragraph (c)(1), we proposed that the Exchange would determine an applicant eligible for an exemption for a month if he or she is a member of a recognized religious sect or division described in section 1402(g)(1) of the Code, and an adherent of established tenets or teachings of such sect or division for such month, in accordance with 26 CFR 1.5000A-3(a) of the Treasury proposed rule.
   In paragraph (c)(2), we proposed eligibility standards regarding the duration of the exemption for religious conscience. In paragraph (c)(2)(i), we proposed that the Exchange grant the exemption for religious conscience to an applicant that meets the standards of paragraph (c)(1) of this section for a month on a continuing basis, until such time that the applicant either reaches the age of 18, or reports that he or she no longer meets the standards provided in (c)(1) of this section.
   We proposed to add paragraph (c)(2)(ii) to specify how the Exchange should handle a situation in which an individual who has a certificate of exemption based on religious conscience that was granted prior to the individual reaching the age of 18. We proposed that the Exchange send such an individual a notice when he or she reaches the age of 18 that informs the individual that he or she needs to submit a new exemption application if he or she would like to maintain the certificate of exemption.
   We proposed to add paragraph (c)(3) to specify that the Exchange will grant an exemption in this category prospectively or retrospectively.
   In paragraph (d), we proposed that the Exchange determine an applicant eligible for an exemption for a month if the applicant is a member of a health care sharing ministry for such month in accordance with 26 CFR 1.5000A-3(b) of the Treasury proposed rule. We proposed that an applicant who wanted to retain this exemption for an additional calendar year would re-apply for this exemption each calendar year, and that the Exchange may only provide an exemption in this category retrospectively.
   In paragraph (e), we proposed the eligibility standards for the exemption based on incarceration. We specified that the Exchange would determine an individual eligible for an exemption for a month that he or she meets the definition specified in 26 CFR 1.5000A-3(d) of the Treasury proposed rule. We proposed that the Exchange would only provide this exemption for months in which an individual was incarcerated, since there is no assurance that an incarcerated individual will be released on the expected date.
   In paragraph (f), we proposed eligibility standards for the exemption based on membership in an Indian tribe. In paragraph (f)(1), we proposed to codify that the Exchange would determine an applicant eligible for an exemption for a month if he or she is a member of an Indian tribe for such month, in accordance with 26 CFR 1.5000A-3(g) of the Treasury proposed rule.
   In paragraph (f)(2), we proposed eligibility standards regarding the duration of the exemption for membership in an Indian tribe, such that the Exchange would grant the exemption for membership in an Indian tribe to an applicant who meets the standards of paragraph (f)(1) of this section for a month on a continuing basis, until such time that the individual reports that he or she no longer meets the standards provided in (f)(1) of this section.
   We proposed to add paragraph (f)(3) to specify that the Exchange will grant an exemption in this category during the year prospectively or retrospectively.
   In paragraph (g), we proposed eligibility standards for the exemption based on hardship, which is defined in section 5000A(e)(5) of the Code as applying to "any applicable individual who for any month is determined by the Secretary under section 1311(d)(
   In paragraph (g)(1) of
   In paragraph (g)(2), we proposed that the Exchange provide an exemption for hardship for a calendar year if an applicant, or another individual for whom the applicant attests will be included in the applicant's family (as defined in 26 CFR 1.5000A-1(d)(6) of the Treasury proposed rule), is unable to afford coverage for such calendar year in accordance with 26 CFR 1.5000A-3(e) of the Treasury proposed rule, calculated using projected annual household income. We proposed identical standards to those defined for the lack of affordable coverage exemption in 26 CFR 1.5000A-3(e) of the Treasury proposed rule, except that the Exchange would use projected household income to determine whether coverage is affordable under this exemption, instead of actual household income from the tax return for the year for which the exemption is requested. We solicited comments regarding whether the approach in paragraph (g)(5) of this section regarding the aggregate cost of employer-sponsored coverage for all the employed members of the family should also be applied in determining eligibility for this hardship category.
   We proposed that this exemption is not available for an application that is submitted after the last date on which an applicant could enroll in a QHP through the Exchange for a calendar year for which the exemption is requested to ensure that an applicant can obtain the information needed to make a purchasing decision, including for a catastrophic plan, which is not applicable after the last date on which enrollment would be possible.
   We proposed in paragraph (g)(3) of
   We proposed to add paragraph (g)(4) to specify that the Exchange provide an exemption for hardship for a calendar year for an individual who has been determined ineligible for
   We proposed to add paragraph (g)(5) of
   Lastly, as noted above, we proposed under our authority in section 1411(d)(4) of the Affordable Care Act that the Exchange would not issue certifications of exemption with respect to household income below the filing threshold (other than the limited hardship exemption proposed in
   Comment: Multiple commenters expressed support for HHS' proposal to allow an individual to apply for and enable the Exchange to grant multiple exemptions, as well as the provision specifying that an individual eligible for an exemption for at least one day of the month receive the exemption for a full month. Another commenter expressed broad support for the proposed exemptions process, but wanted HHS to maintain its focus on ensuring individuals receive coverage through the Exchange.
   Response: In fulfilling the goals of the Affordable Care Act, we are committed to ensuring that all individuals have access to quality, affordable health coverage. Furthermore, as specified in the statute, we are also committed to providing access to exemptions from the shared responsibility payment to those individuals who meet specified standards.
   Comment: Commenters expressed differing opinions regarding whether the Exchange should send notices to individuals in possession of certain certificates of exemption at the end of a calendar year to remind them of the need to submit an application for the same exemption for the next calendar year. Several commenters wanted HHS to specify that the Exchange send such a reminder notice that would arrive during open enrollment, to allow an individual to make the appropriate purchasing decision. Another commenter opposed specifying that the Exchange send such a reminder notice, noting that most exemptions are meant to be temporary, and that the primary goal of the Exchange should be ensuring that individuals have access to coverage.
   Response: We will maintain the language as proposed, which does not specify that Exchanges will send an additional reminder notice to an individual at the end of a calendar year. Pursuant to the eligibility standards for exemptions described throughout
   Comment: Several commenters raised concerns regarding our proposed codification of the eligibility standards for the religious conscience exemption specified in the Affordable Care Act. Some commenters expressed philosophical opposition to the notion that the government would exempt individuals for religious purposes. Other commenters opposed our proposal to allow children of individuals in recognized religious sects or divisions to be exempt in addition to their parents. Commenters believed that as a result, parents would not have to maintain minimum essential coverage for their dependent children, which they feared would permit parents to avoid caring for their children's health.
   Response: Section 5000A(d)(2) of the Code, as added by section 1501(b) of the Affordable Care Act, establishes the religious conscience exemption. We note that state laws governing domestic relations allow parents to attest on behalf of minor children, which was the basis of our proposal. We note that we do not intend this provision to modify or supersede any other laws regarding health responsibility for children.
   Comment: One commenter suggested the
   Response: As noted above, the statute specifies that the religious conscience exemption may only be granted by the Exchange. We are working closely with the SSA to define an appropriate process to address religious sects that are not yet recognized, and we clarify in
   Comment: One commenter requested that HHS expand the religious sects and divisions whose members qualify for the religious conscience exemption.
   Response: HHS does not have the authority to expand the criteria set in the statute, which reference section 1402(g)(1) of the Code, and so we are finalizing the cross-reference to the statutory criteria as proposed.
   Comment: Commenters expressed differing opinions regarding our proposal that when an individual who has a religious conscience exemption turns 18, he or she must re-apply for the exemption in order to maintain it. One commenter opposed specifying that the Exchange send a notice, instead arguing that the individual turning 18 should be responsible for reapplying without a prompt. Another commenter noted that based on the practices of the religious sects and divisions that this exemption covers, HHS should modify this provision such that the age standard is 21.
   Response: In response to comments, to align with other Affordable Care Act definitions of children, and to reduce burden on individuals under the age of 21, we are modifying this provision in the final rule to specify that individuals receiving the religious conscience exemption will have to re-apply for the exemption upon turning 21. We will maintain the provision specifying that the Exchange send a notice prompting an individual to reapply upon turning 21, since this notice is needed to notify him or her that his or her exemption will end absent a new application. Nothing precludes individuals affected by this change from obtaining coverage on their own.
   Comment: One commenter suggested that the Exchange should have the flexibility not to grant exemptions based on membership in a health care sharing ministry or incarceration. The commenter noted the limited benefit for individuals in having an Exchange grant such exemptions since the proposed rule specifies that they are only available through the Exchange retrospectively within a calendar year, and are otherwise available through the tax filing process.
   Response: We believe that individuals will benefit from the opportunity to receive the exemptions based on membership in a health care sharing ministry or incarceration through the Exchange in addition to through the tax filing process, and as such, are finalizing the provision as proposed.
   Comment: One commenter suggested that HHS clarify the language used in
   Response: In proposed
   Comment: One commenter expressed support for HHS' proposal that the Exchange grant the exemption based on membership in an Indian tribe as long as individuals still maintained the opportunity to file for this exemption through the tax filing process. Another commenter suggested that Exchanges should not grant exemptions based on membership in an Indian tribe, but that rather such exemption should only be available through the tax filing process. Alternatively, this commenter said that if the Exchange does grant this exemption, it should only do so prospectively.
   Response: We believe that individuals will benefit from the opportunity to receive the exemption based on membership in an Indian tribe through the Exchange in addition to through the tax filing process. Furthermore, we do not believe that granting this retrospectively and prospectively will result in significant burden for the Exchange, since no work is necessary to determine eligibility for this exemption retrospectively beyond what would be necessary to determine eligibility for it prospectively. Accordingly, we are finalizing this provision as proposed.
   Comment: Some commenters expressed concerns about the definition of Indian tribe proposed in
   Response: We have thoroughly reviewed the definitions of the term "Indian" in the Affordable Care Act. HHS does not have the legal authority to modify through regulation the statutory definitions of "Indian" as referenced in the Affordable Care Act. There is no administrative flexibility to align these definitions. Any changes to the definition must be legislative. In response to comments, we added a category of hardship exemption in
   Comment: Multiple commenters expressed overall support for our proposal in
   Response: In preamble to the proposed rule, we noted that we expected to clarify detailed hardship criteria in future guidance. Accordingly, to assist Exchanges in determining eligibility for a hardship exemption for an individual who experienced circumstances that prevented him or her from obtaining coverage under a QHP, we are publishing guidance simultaneously with this rule that provides detailed criteria for this exemption.
   Comment: One commenter recommended that Exchanges have greater flexibility in determining the duration of a single exemption, particularly due to the many circumstances that could be covered by the hardship exemption. Several commenters recommended that HHS provide Exchanges with clearer guidance regarding the duration of hardship exemptions that could be granted according to
   Response: In response to comments, we clarify that a hardship exemption granted under
   Comment: Numerous commenters urged HHS to specify additional categories of hardship exemptions outside of those proposed or to expand the scope of certain categories of hardship exemptions as proposed. These suggestions include providing hardship exemptions for: Employees who have an offer of self-only employer-sponsored coverage that costs less than 8 percent of household income, but for whom family coverage costs more than 8 percent of household income; individuals with income less than 150 percent of the FPL; individuals for whom the aggregate cost of employer-sponsored coverage (not only employed members) exceeds 8 percent of household income for that month(s); individuals and families with household income below 250 percent of the FPL that are offered affordable employer-sponsored coverage (less than 8 percent of household income), but the amount that the individual or family would have to pay for the lowest-cost bronze plan on the Exchange exceeds 8 percent of household income; individuals and their dependents who have an offer of employer-sponsored coverage that is affordable but that does not provide minimum value; individuals participating in special non-minimum essential coverage programs that already require financial determinations by a state; individuals who already receive certain kinds of public assistance benefits; or individuals who in good faith attempted to purchase insurance but were unable to do so based on limited enrollment opportunities.
   Response: As specified in guidance published simultaneously with this final rule, we have identified several events that Exchanges can refer to in order to help them in determining eligibility for hardship exemptions. These will also be the detailed criteria used by the Federally-facilitated Exchange. Due to the broad range of circumstances that will qualify an individual for a hardship exemption, we do not believe that further categories of exemptions need to be added to the text of the regulation. However, as discussed further below, we have modified the eligibility standards for the hardship exemption for situations in which coverage is unaffordable based on projected income such that if an individual and his or her dependents have an offer of employer-sponsored coverage that does not meet the minimum value standard, the Exchange will not consider this offer in determining affordability. Rather, in such a situation, the Exchange will consider affordability based on the lowest-cost offer of employer-sponsored coverage that does meet the minimum value standard, and if no such offer exists, on the cost of the applicable lowest cost bronze plan in the relevant rating area of the Exchange, reduced by any available advance payments of the premium tax credit. This is similar to the considerations for eligibility for advance payments of the premium tax credit based on eligibility for coverage in an eligible employer-sponsored plan, which take into account both cost and minimum value.
   Comment: One commenter expressed concerns about the burden on Exchanges to handle eligibility determinations for exemptions, including the hardship exemption, as they viewed the eligibility determination process for exemptions as more appropriately handled through the tax filing process, particularly when exemptions are not available prospectively through the Exchange. Some commenters supported the proposed hardship exemption at
   Response: Based on comments received, and in order to minimize burden on Exchanges while ensuring efficient processing of exemptions applications, we will modify
   Comment: Commenters expressed broad support for our proposal at
   Response: We appreciate the concerns raised by commenters arguing both for and against maintaining this hardship exemption as proposed. We continue to believe that it is appropriate that individuals, even those eligible for advance payments of the premium tax credit, to be eligible for this hardship exemption if ineligible for
   Comment: Several commenters expressed general support for
   Response: We note that while the lack of affordable coverage based on projected income hardship exemption and the lack of affordable coverage exemption described in section 5000A(e)(1) of the Code address certain situations where a related individual is ineligible for advance payments of the premium tax credit based on 26 CFR 1.36B-2(c)(3)(v)(A)(2), these provisions are not intended to provide an exemption in all cases in which an individual may be ineligible for advance payments of the premium tax credit.
   We finalize this exemption to generally follow the standards in section 5000A(e)(1) of the Code. As in the proposed rule, we specify in paragraph (g)(2)(i) of the final rule that this exemption differs from the exemption described in section 5000A(e)(1) of the Code in that it relies on projected household income. In order to facilitate implementation of this exemption, we add paragraphs (g)(2)(ii), (iii), and (iv) to clarify the applicable standards. First, in paragraph (g)(2)(ii), we clarify that as described above, the Exchange will only consider the affordability of an eligible employer-sponsored plan for this exemption if it meets the minimum value standard. Second, in paragraph (g)(2)(iii), we describe how the Exchange will determine the cost of coverage for an individual who is eligible to purchase coverage under an eligible employer-sponsored plan.
   We note that, under the Treasury proposed rule, the standards for determining the required contribution for coverage through an eligible employer-sponsored plan vary depending on whether an individual is an employee eligible to purchase coverage under an eligible employer-sponsored plan through the employee's employer, or is eligible to purchase coverage under an eligible employer-sponsored plan because of a relationship to an employee, with respect to eligibility for an exemption. For an individual employee who is eligible through his or her own employer, the affordability calculation is based on the lowest cost option for self-only coverage. For all other individuals eligible to purchase coverage under an eligible employer-sponsored plan, the required contribution is the portion of the annual premium that the employee would pay for the lowest cost option for family coverage that would cover the employee and all individuals who are included in the employee's family and are not otherwise exempt. We note that the Exchange will only know whether an individual within the employee's family has been granted an exemption by that Exchange. Accordingly, we specify in paragraph (g)(2)(iii)(C) that the Exchange will consider the lowest cost family coverage that meets the minimum value standard and would cover the employee and all other individuals who are included in the employee's family who have not otherwise been granted an exemption through the Exchange.
   We also note that proposed 26 CFR 1.36B-2(c)(3)(v)(A)(4) (78 FR 25914), provides that for purposes of determining eligibility for the premium tax credit, the affordability of coverage in an eligible employer-sponsored plan is determined by assuming that each employee satisfies the requirements of available nondiscriminatory wellness programs related to tobacco use, and does not satisfy the requirements of any available wellness programs that are not related to tobacco use. That is, if a plan includes a nondiscriminatory wellness program for tobacco users, such as smoking cessation classes, the affordability of coverage under that plan will be determined based on the premium that is charged to tobacco users who complete this program. In the preamble to proposed 26 CFR 1.36B-2(c)(3)(v)(4) (78 FR 25911), Treasury also noted that it expects to specify that this treatment of nondiscriminatory wellness programs will also be used in determining the required contribution for purposes of the lack of affordable coverage exemption under section 5000A(e)(1) of the Code.
   Accordingly, in order to ensure that an individual is not liable for the shared responsibility payment if he or she is ineligible for advance payments of the premium tax credit and cost-sharing reductions as a result of a finding by the Exchange that he or she is eligible for qualifying coverage in an eligible employer-sponsored plan based on incorporating the completion of a tobacco-related wellness program, we specify in paragraph (g)(2)(iii)(A) that the Exchange will determine eligibility for the exemption specified in paragraph (g)(2) for an individual who uses tobacco without incorporating any discount resulting from the completion of a wellness program designed to prevent or reduce tobacco use. We also specify in paragraph (g)(2)(iii)(B) that discounts from wellness incentives offered by an eligible employer-sponsored plan that do not relate to tobacco use are treated as not earned.
   In paragraph (g)(2)(iv), we clarify that in the case of an individual who is ineligible to purchase coverage under an eligible employer-sponsored plan, or only eligible to purchase coverage under an eligible employer-sponsored plan that does not meet the minimum value standard, the Exchange will determine the required contribution for coverage in accordance with section 5000A(e)(1)(B)(ii) of the Code, inclusive of all members of the individual's family who have not otherwise been granted an exemption through the Exchange, and who are not treated as eligible to purchase coverage under an eligible employer-sponsored plan that meets the minimum value standard. This determination is based on the premium for the single lowest cost bronze plan available, less any credit allowable under section 36B of the Code, in the individual market through the Exchange serving the rating area in which the individual resides.
   Furthermore, we clarify that in finalizing this provision, we specify in paragraphs (g)(2)(v) and (g)(2)(vi) that this exemption will be available throughout the calendar year prospectively for a month or months until the last date on which an individual could enroll in a QHP through the calendar year for which the exemption is requested. This refers not only to the open enrollment period, but to any special enrollment period, notwithstanding special effective dates, for which an individual may potentially be determined eligible during the calendar year under 45 CFR 155.420(b). As such, an individual may be determined eligible for this exemption for the remaining month or months of a calendar year as late as November of that calendar year, as the effective dates for a special enrollment period under
   Comment: Some commenters wanted to ensure that Exchanges would provide clear and easily understandable information to explain different exemptions available to individuals, including the steps needed to apply for an exemption.
   Response: We recognize the need for consumer information that explains the available exemptions as well as the necessary documentation and steps needed for individuals to apply. We expect to work with states and other stakeholders to ensure that individuals are properly educated about the exemption eligibility process.
   Comment: One commenter wanted to ensure that the Exchange would issue a certificate of exemption to any individual who is qualified and not limit the availability of certificates to only those individuals who are seeking coverage through the Exchange.
   Response: We agree with the commenter that the Exchange will not limit certificates of exemption to individuals who are seeking coverage through the Exchange. We note that a hardship exemption will allow an individual to enroll in a catastrophic plan, both inside and outside the Exchange, and the Exchange may not limit the availability of an exemption contingent on an individual seeking coverage through the Exchange or elsewhere. Further, while a portion of the eligibility process for the hardship exemption proposed in
   Comment: One commenter was supportive of HHS' decision not to specify that the Exchange would grant the exemption specified in section 5000A(d)(3) of the Code for individuals who are not lawfully present, but also recommended clear guidance and instructions regarding individuals who nevertheless attempt to apply for this exemption through the Exchange to ensure that the Exchange will follow the appropriate privacy and confidentiality protections, and also to direct individuals to claim this exemption through the tax filing process.
   Response: We note that the privacy and confidentiality protections in 45 CFR 155.260 apply to the exemption eligibility process, and are sufficient to address these concerns. Furthermore, we expect that the Exchange will provide clear guidance regarding the exemptions available through the Exchange as well as the exemptions that can be claimed solely through the tax filing process, in order to appropriately direct individuals.
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
   We add paragraph (g)(2)(ii) to clarify that the Exchange will only consider the affordability of an eligible employer-sponsored plan for the exemption described in paragraph (g)(2) if the eligible employer-sponsored plan meets the minimum value standard. We add paragraph (g)(2)(iii) to clarify the applicable standards if an individual is eligible for coverage through an eligible employer-sponsored plan that meets the minimum value standard, and note in paragraph (g)(2)(iii)(A) that an individual who uses tobacco is treated as not earning any premium incentive related to participation in a wellness program designed to prevent or reduce tobacco use that is offered by an eligible employer-sponsored plan, and in paragraph (g)(2)(iii)(B) that discounts from wellness incentives offered by an eligible employer-sponsored plan that do not relate to tobacco use are treated as not earned. That is, for purposes of this exemption, the cost of an eligible employer-sponsored plan that includes a premium differential for smokers and non-smokers is calculated using the non-smoker premium for non-smokers, and the smoker premium for smokers, without any discounts that may be available through smoking cessation programs. We outline the appropriate methods to determine the required contribution for coverage through an eligible employer-sponsored plan that meets the minimum value standard in paragraphs (g)(2)(iii)(C) and (D), depending on whether an individual is an employee eligible to purchase coverage under an eligible employer-sponsored plan through the employee's employer, or is eligible to purchase coverage under an eligible employer-sponsored plan by reason of a relationship to an employee. We specify in paragraph (g)(2)(iii)(D) that the Exchange will consider the lowest cost family coverage that meets the minimum value standard that would cover the employee and all other individuals who are included in the employee's family who have not otherwise been granted an exemption through the Exchange. We specify in paragraph (g)(2)(iv) that the Exchange will determine the required contribution for coverage in the individual market in the case of an individual who is ineligible to purchase coverage under an eligible employer-sponsored plan in accordance with section 5000A(e)(1)(B)(i) of the Code, or eligible only to purchase coverage under an eligible employer-sponsored plan that does not meet the minimum value standard, inclusive of all members of the individual's family who have not otherwise been granted an exemption through the Exchange, or are treated as eligible to purchase coverage under an eligible employer-sponsored plan that meets the minimum value standard. We also clarify in paragraphs (g)(2)(v) and (g)(2)(vi) that this exemption will be available throughout the calendar year prospectively for a month or months until the last date on which an individual could enroll in a QHP through the calendar year for which the exemption is requested, and that the Exchange will provide an exemption in this category for all remaining months in a coverage year, notwithstanding any change in an individual's circumstances.
   We clarify that the Exchange may not grant the hardship exemptions under paragraph (g)(3) and (5) of this section, but rather only the
c. Eligibility Process for Exemptions (
   In SEC 155.610, we proposed the process by which the Exchange would determine an applicant's eligibility for exemptions. In paragraph (a), we proposed to specify that the Exchange would use an application established by HHS in order to collect the information necessary to determine eligibility and grant a certificate of exemption for an applicant, unless the Exchange receives approval to use an alternative application. We also clarified that in cases in which relevant information has already been collected through the eligibility process for enrollment in a QHP and for insurance affordability programs, the Exchange would use this information for the purpose of eligibility for an exemption to the maximum extent possible.
   In paragraph (b), we proposed that the Exchange may seek approval from HHS for an alternative application. We further specified that such alternative application must only request the minimum information necessary for the purposes identified in paragraph (a) of this section.
   In noting that there are exemptions that share common data and verifications with the eligibility process for enrollment in a QHP and for insurance affordability programs, in paragraph (c) we proposed that if an individual submits the application in 45 CFR 155.405 and then requests an exemption, the Exchange would use the information collected on the application for coverage and not duplicate any verification processes that share the standards specified in this subpart. We solicited comments on how best to coordinate these processes to ensure maximum administrative simplicity for all involved parties.
   In paragraph (d), we proposed the Exchange would accept the application for an exemption from an application filer, and provide tools for the submission of an application. We did not specify particular channels for application acceptance, but we solicited comments regarding whether we should specify some or all of the channels included in 45 CFR 155.405.
   In paragraph (e), we proposed that the Exchange would specify that an applicant who has a social security number (SSN) will provide such number to the Exchange in order to coordinate information in the tax filing process and provide the Exchange with additional information with which to ensure program integrity. However, we proposed to clarify in paragraphs (e)(2) and (e)(3) that the Exchange may not require an individual who is not seeking an exemption for him or herself to provide a SSN, except that the Exchange would require an application filer to provide the SSN for a non-applicant tax filer only if the applicant attests that the tax filer has a SSN and filed a tax return for the year for which tax data would be utilized to verify household income and family size for a hardship exemption. We solicited comments on the applicability of this provision in the context of the exemption eligibility process.
   In paragraph (f), we proposed that the Exchange would grant a certificate of exemption to any applicant determined eligible in accordance with the standards for exemptions provided in
   In paragraph (g)(1), we proposed that the Exchange determine eligibility for exemptions promptly and without undue delay, which is the same timing threshold used throughout subpart D of this part, including in 45 CFR 155.310(e)(1), with respect to eligibility determinations for enrollment in a QHP and for insurance affordability programs. In paragraph (g)(2), we proposed that the assessment of timeliness of eligibility determinations by the Exchange is based on the period from the date of the application until the date on which the Exchange notifies the applicant of its decision. We solicited comments regarding specific performance standards for the eligibility process described in this subpart, and whether we should define an outer bound in which an eligibility determination will be made.
   In paragraph (h), we proposed to clarify that except for the exemptions for religious conscience and membership in an Indian tribe proposed in
   In paragraph (i), we proposed that the Exchange provide timely written notice to an applicant of any eligibility determination for an exemption made in accordance with this subpart, which could be provided through electronic means, consistent with
   In paragraph (j), we proposed that an individual who has been certified by an Exchange as qualifying for an exemption retain the records that demonstrate not only receipt of the certificate of exemption but also qualification for the underlying exemption. We noted that to the extent that the Exchange provides a certificate of exemption for which the underlying verification is based in part on the special circumstances exception proposed in
   Comment: Commenters were generally supportive of our proposals throughout this section. One commenter suggested that HHS codify the preamble language specifying that individuals could apply for multiple exemptions simultaneously. Another commenter sought clearer standards regarding the eligibility process for exemptions in order to limit administrative burden.
   Response: We believe that the language proposed in this section provides the appropriate amount of detail to guide the Exchange in establishing an efficient process for exemptions, while also allowing for the Exchange to have the necessary flexibility to administer these processes effectively. We clarify that while we believe individuals will benefit from the opportunity to seek multiple exemptions simultaneously, we feel that the existing regulation text is sufficient, and so are finalizing it as proposed.
   Comment: One commenter recommended that HHS revise the language in
   Response: We share the commenter's concern regarding Exchanges using an exemptions application that minimizes the information individuals must provide to receive an eligibility determination for an exemption, and is subject to robust privacy and security protections. We believe that the comment regarding limiting requests for information to only what is necessary is addressed in proposed
   Comment: Commenters made several suggestions with the goal of enhancing the efficiency of the coverage and exemptions application processes. Several commenters supported our proposals to re-use information from the coverage application for the purposes of exemptions eligibility determinations when possible in order to prevent collecting duplicate information. One commenter recommended combining the coverage application and exemptions application in order to streamline the eligibility determination process for both enrollment in a QHP and exemptions, reduce burden on individuals and Exchanges, and inform an applicant of all potential coverage or exemptions options based on his or her particular circumstances.
   Response: As noted in our proposed rule, we continue to believe that where possible, individuals who apply for coverage should not have to provide duplicate information to the Exchange if they subsequently decide to apply for an exemption. We also believe that it is important to have separate applications for coverage and exemptions to avoid creating burden on those individuals who are only seeking coverage or exemptions. Accordingly, we are finalizing these provisions as proposed.
   Comment: One commenter viewed the language in
   Response: We are modifying this language to clarify that when an Exchange has verified information through the eligibility process for enrollment in a QHP through the Exchange and for insurance affordability programs, and such verifications occur in accordance with the standards specified in this subpart, the Exchange may not repeat the verification for purposes of determining eligibility for an exemption. For example, we note that the verification procedures for the exemption for members of an Indian tribe cross-references the verification procedures in subpart D of this part; accordingly, if the Exchange verified that an individual meets the standards through the eligibility process for enrollment in a QHP and for insurance affordability programs, and such an individual subsequently requests an exemption based on membership in an Indian tribe, the Exchange will not repeat the verification.
   Comment: Commenters urged that the Exchange allow individuals to apply for an exemption via the same channels as the coverage application, including online, by telephone, by mail, and in person. One commenter raised particular concerns in terms of allowing individuals to have the full range of options to apply for a religious conscience exemption.
   Response: We are committed to providing an efficient and consumer-friendly application process for exemptions. In
   Comment: Several commenters appreciated HHS' proposal in
   Response: We appreciate the commenter's concerns, and note that
   Comment: Several commenters were generally supportive of HHS specifying that Exchanges determine individuals eligible for an exemption "promptly and without undue delay," but also raised concerns about the lack of clear timeliness standards proposed at
   Response: We drafted this provision based on the timeliness standards for the coverage process and believe that the current language is appropriate. Accordingly, we are finalizing this provision as proposed. We are also finalizing proposed paragraph (g)(2), which specifies that the Exchange will assess the timeliness of eligibility determinations. As with the coverage process, we intend to work closely with Exchanges to monitor timeliness and identify opportunities to improve performance. We note that HHS does not have authority to determine whether an individual is liable for the shared responsibility payment, as such authority belongs to the
   Comment: One commenter noticed a discrepancy between the preamble associated with
   Response: We believe that it is appropriate to provide exemptions based on religious conscience and membership in a federally-recognized Indian tribe retrospectively, without a time limit for filing. We note that as a result of a drafting oversight, we did not include a reference to the hardship exemption in the regulation text to specify that this should also be treated differently than under the general rule, and we correct this in the final regulation. We also provide for further special treatment for hardship exemptions; specifically, that the Exchange will only accept an application for the hardship exemption under paragraph
   Comment: Based on HHS' proposal to allow individuals to apply for multiple exemptions, one commenter worried about the potential that individuals would be confused if receiving multiple notices as a result. The commenter requested that once an exemption is granted for a period, HHS specify that the Exchange would not provide a notice regarding any further exemptions for which an individual applied for the same time period. The commenter suggested that an individual should only receive a denial notice for a month or months where he or she does not already have a certificate of exemption in effect.
   Response: We share the commenter's concerns regarding limiting potential confusion for a consumer who applies for multiple exemptions simultaneously. Accordingly, we clarify that in a situation in which an individual applies for multiple exemptions, we expect the Exchange will provide the appropriate notice regarding each exemption for which an individual applied, as we believe that not providing feedback for all requested exemptions could create additional confusion for consumers. We also expect that if an applicant is approved for an exemption, and then is later denied for a different exemption for the same period of time, the notice describing the denial will clearly state that the applicant's prior exemption remains in effect.
   Comment: Regarding the proposed recordkeeping provision at
   Response: We agree with the commenters' suggestion to clarify that the Exchange will notify individuals to retain both the certificate of exemption as well as records that demonstrate the underlying qualification for the exemption. We are maintaining this paragraph with that clarification in the final regulation, since the Exchange is providing the certificate of exemption and is thus ideally positioned to notify individuals of this issue.
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
d. Verification Process Related to Eligibility For Exemptions (
   In this section, we proposed language regarding the verification process related to eligibility for exemptions. These processes were designed not only to minimize the burden on applicants, but also to serve a valuable program integrity function in order to assure that applicants are only deemed eligible for exemptions if they meet the standards specified in
   In paragraph (a), we proposed that unless HHS grants a request for modification under paragraph (i) of this section, the Exchange will verify or obtain information as provided in this section in order to determine that the applicant is eligible for an exemption.
   In paragraph (b), we proposed the verification process concerning the exemption for religious conscience. We specified that for any applicant requesting this exemption, the Exchange will verify that he or she meets the standards as outlined in
   Third, in paragraph (b)(3), we proposed that if the information provided by an applicant regarding his or her membership in a recognized religious sect or division is not reasonably compatible with other information provided by the individual or the records of the Exchange, the Exchange will follow the procedures specified in paragraph (g) of this section concerning situations in which the Exchange is unable to verify information.
   Fourth, in paragraph (b)(4), we proposed that if an applicant attests to membership in a religious sect or division that is not recognized by SSA as a religious sect or division under section 1402(g)(1) of the Code, the Exchange must provide the applicant with information regarding how his or her religious sect or division can pursue recognition under section 1402(g)(1) of the Code, and determine the applicant ineligible for this exemption until such time as the Exchange obtains information indicating that the religious sect or division has been approved.
   In paragraph (c), we proposed the verification process concerning the exemption for membership in a health care sharing ministry. We specified that for any applicant requesting this exemption, the Exchange will verify whether he or she meets the standards in
   In paragraph (c)(2), we proposed that if the information provided by an applicant regarding his or her membership in a health care sharing ministry is not reasonably compatible with other information provided by the individual or the records of the Exchange, the Exchange will follow the procedures specified in paragraph (g) of this section concerning situations in which the Exchange is unable to verify information.
   In paragraph (c)(3), we proposed that if an applicant attests to membership in a health care sharing ministry that is unknown to the Exchange as a health care sharing ministry according to the standards in
   In paragraph (d), we proposed the verification process concerning the exemption for incarceration. We specified that for any applicant requesting this exemption, the Exchange will verify, through the process described in 45 CFR 155.315(e), that he or she was incarcerated. In paragraph (d)(2), we proposed that if the Exchange is unable to verify an applicant's incarceration status through the verification process outlined, the Exchange will follow the procedures in paragraph (g) of this section concerning situations in which the Exchange is unable to verify information.
   In paragraph (e), we proposed the verification process concerning the exemption for members of Indian tribes. We specified in paragraph (e)(1) that for any applicant requesting this exemption, the Exchange will verify his or her membership in an Indian tribe through the process outlined in 45 CFR 155.350(c). In paragraph (e)(2), we also proposed that the Exchange follow the procedures specified in paragraph (g) of this section if it is unable to verify an applicant's tribal membership.
   In paragraph (f), we proposed the verification process concerning exemptions for hardship. In paragraph (f)(2), we proposed that for an applicant applying for a hardship exemption prospectively based on an inability to afford coverage, as described in
   In paragraph (g), we proposed procedures for the Exchange to follow in the event the Exchange is unable to verify information necessary to make an eligibility determination for an exemption, including situations in which an applicant's attestation is not reasonably compatible with information in electronic data sources or other information in the records of the Exchange, or when electronic data are required but unavailable. These procedures mirror those provided in
   In paragraph (g)(5), we proposed that, if after the conclusion of the period described in paragraph (g)(2)(ii) of this section, the Exchange is unable to verify the applicant's attestation, the Exchange will determine the applicant's eligibility based on the information available from the data sources specified in this subpart, as applicable, unless such applicant qualifies for the exception provided under paragraph (h) of this section, and notify the applicant in accordance with the procedures described under
   In paragraph (h), we proposed a provision under which the Exchange would provide a case-by-case exception for applicants for whom documentation does not exist or is not reasonably available to account for situations in which documentation cannot be obtained.
   In paragraph (i), we proposed that HHS have the flexibility to approve an Exchange Blueprint or a significant change to an Exchange Blueprint to modify the methods for the collection and verification of information as described in this subpart, as well as the specific information to be collected, based on a finding by HHS that the requested modification would reduce the administrative costs and burdens on individuals while maintaining accuracy and minimizing delay, and that any applicable requirements under 45 CFR 155.260, 45 CFR 155.270, paragraph (j) of this section, and section 6103 of the Code with respect to the confidentiality, disclosure, maintenance, or use of information will be met.
   In paragraph (j), we proposed that the Exchange will not require an applicant to provide information beyond what is necessary to support the process of the Exchange for eligibility determinations for exemptions, including the process for resolving inconsistencies described in paragraph (g) of this section.
   Comment: One commenter raised broad concerns about potential challenges for consumers regarding verification, and requested that HHS specify a 1-year transition period during which the Exchange would rely primarily on self-attestation, using a form signed under penalty of perjury, or auditing a portion of applications submitted by individuals.
   Response: We share the commenter's desire for a good consumer experience for those individuals who are seeking an exemption. However, we believe that statutory and program integrity concerns argue in favor of the Exchange applying a more comprehensive verification process than self-attestation. We expect to learn from the initial months and years of operations, and to work with states to achieve continuous improvement, with a particular focus on the consumer experience.
   Comment: One commenter recommended that a taxpayer who already has an approved
   Response: We strive to establish an Exchange exemption process that minimizes the burden on individuals to the extent possible. We note that section 5000A(d)(2) of the Code specifies that the religious conscience exemption is available only through the Exchange. However, we note that we are finalizing proposed
   Comment: One commenter recommended that in situations in which the health care sharing ministry to which an individual attests membership is not included on the list provided to the Exchange by HHS, HHS should issue the eligibility determination notice denying the exemption as opposed to the Exchange.
   Response: If an Exchange accepts the original exemption application from an individual, we continue to believe that it is appropriate for the Exchange to issue the corresponding eligibility determination notice in order to prevent confusion that individuals may experience if receiving a separate notice from HHS. We note that nothing precludes an Exchange from notifying such an individual that the determination is based on a list provided by HHS.
   Comment: One commenter requested further specificity about the process and standards HHS will use in developing the list of health care sharing ministries that meet the standards specified in the statute.
   Response: We recognize the importance of providing a clear process for establishing the list of health care sharing ministries that meet the statutory standards. Accordingly, we are renumbering proposed
   We also clarify in paragraph (c)(1)(iii) that if an applicant attests to membership in a health care sharing ministry that is not known to the Exchange as a health care sharing ministry based on information provided by HHS, the Exchange must provide the applicant with information regarding how an organization can pursue recognition under
   Comment: One commenter urged HHS to remove the reference to reasonable compatibility as part of verifying membership in a health care sharing ministry, or to clarify that an individual could still receive an exemption based on membership in a health care sharing ministry if he or she had been enrolled in health insurance in the past or was currently enrolled in health insurance.
   Response: In response to the commenter, we will clarify that the Exchange will not consider an individual's current or previous health coverage as reasonably incompatible with membership in a health care sharing ministry, since nothing in the statute limits the availability of such an exemption to an individual who was or is uninsured.
   Comment: One commenter suggested that for purposes of the Federally-Facilitated Exchange, HHS work with local tribes and the
   Response: We appreciate this comment, and are committed to creating an efficient eligibility process for all applicants. In proposed
   Comment: One commenter recommended that HHS should specify that an individual renew an exemption based on membership in an Indian tribe on an annual basis. Other commenters urged HHS to use electronic data matching with the
   Response: We modeled the verification process for the exemption based on an individual's membership in an Indian tribe on the verification process that will be used for individuals seeking coverage at 45 CFR 155.350(c). We appreciate the suggestions from commenters, as they generally follow our approach in 45 CFR 155.350(c). Specifically, in 45 CFR 155.350(c), we specify that the Exchange will first use any approved electronic data sources, and only request paper documentation when electronic data sources are unavailable or do not support an applicant's attestation. 45 CFR 155.350(c) does not specify that the Exchange will contact a tribe's Contract Health Services Officer or tribal enrollment office when documentation is unavailable. Rather, in
   Comment: One commenter worried that the proposed verifications process placed too much burden on individuals as opposed to the Exchange, and urged HHS to shift this burden in the future.
   Response: We have attempted to limit burden on individuals as much as possible in the proposed and final regulations. We intend to work with all relevant stakeholders in the future to identify opportunities to increase the efficiency and integrity of the verification process.
   Comment: Commenters expressed concerns regarding proposed
   Response: In response to comments, we will modify proposed
   Comment: Multiple commenters expressed support for our proposal at
   Response: As this exception for special circumstances mirrors similar language used in regards to the coverage process at
   Comment: One commenter expressed support for
   Response: We affirm that the Exchange should collect only the minimum information necessary to support the eligibility process for exemptions. The proposed language mirrors that used in 45 CFR 155.315(i), which is designed to implement section 1411(g)(1) of the Affordable Care Act. We also note that the overarching privacy and security protections specified in 45 CFR 155.260 apply to the exemptions process. Together, we believe that these sections already appropriately address the commenter's concerns regarding information collection and privacy.
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
   We specify in paragraph (f)(1) that the Exchange will not verify whether an applicant experienced a hardship under
   In 78 FR 4636, we proposed to modify
e. Eligibility Redeterminations for Exemptions During a Calendar Year (
   In SEC 155.620, we proposed in paragraph (a) to implement section 1411(f) of the Affordable Care Act by providing that the Exchange will redetermine an individual's eligibility for an exemption if the Exchange receives and verifies new information as reported by an individual. In paragraph (b)(1), we proposed that the Exchange will require an individual with a certificate of exemption to report any changes related to the eligibility standards described in
   In paragraph (b)(2), we proposed that the Exchange would allow an individual to report changes through the channels acceptable for the submission of an exemption application.
   In paragraph (c), we proposed that the Exchange use the verification processes used at the point of initial application, as described in
   Also unlike the eligibility process for enrollment in a QHP and for insurance affordability programs, we did not propose an annual Exchange redetermination process for exemptions. We solicited comments regarding how the Exchange could expedite and streamline the process for individuals with a certificate of exemption that is not approved indefinitely who wish to maintain the exemption for a subsequent year.
   Comment: One commenter stated that individuals should not have to report changes in religious status or their status as a member of an Indian tribe, but rather the religious sect or tribe should report such a change in status to the Exchange or HHS in order to prevent fraud.
   Response: We share the commenter's program integrity concerns, but continue to believe that the responsibility to report changes remains appropriately on the individual who has received an exemption. As Exchanges start to grant exemptions, we will work with states to monitor the process and determine whether changes would be appropriate.
   Comment: One commenter sought clarification as to whether redeterminations only occur when an individual reports a change or whether the Exchange has the authority to cancel an exemption it previously granted on its own.
   Response: We clarify that redeterminations under this section can only occur when an individual reports a change that impacts his or her eligibility determination for an exemption.
   Comment: Several commenters expressed concerns regarding the burden involved in requiring an individual to report changes that would impact his or her eligibility for an exemption. One commenter inquired about how HHS would enforce the regulatory reporting requirements.
   Response: The proposed approach is identical to the approach taken in
   Comment: Commenters raised concerns about requiring individuals to report changes, and suggested that if HHS maintains these requirements, they should provide a special enrollment period for an individual who loses their exemption in the middle of a calendar year as a result of a redetermination and who has no opportunity to enroll in coverage, which would leave them potentially liable for the shared responsibility payment.
   Response: We do not want to create an incentive for an individual who has an exemption to not report changes in their eligibility. We also do not want to create a situation in which an individual who has followed procedures and wants to enroll in health coverage is instead liable for the shared responsibility payment. We are adding paragraph (d) to clarify that the Exchange will implement a change resulting from a redetermination under this section for the month or months after the month in which the redetermination occurs such that a certificate that was provided for the month in which the redetermination occurs, and for prior months, remains effective. We address the ability of an individual who loses eligibility for an exemption following a redetermination to enroll in a QHP in the guidance published simultaneously with this final regulation.
   Comment: One commenter suggested that the Exchange provide periodic electronic notifications regarding reporting changes to individuals only if they decide to receive such notifications as opposed to providing individuals periodic electronic notifications regarding reporting changes unless they affirmatively decline to receive such notifications.
   Response: As we proposed this provision to mirror a similar provision concerning the coverage process at
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
f. Options for Conducting Eligibility Determinations for Exemptions (
   In SEC 155.625, we proposed that a state-based Exchange can satisfy the requirements of subpart G if it uses a federally-managed service to make eligibility determinations for exemptions, and we solicited comments regarding the specific configuration of a service that would be useful for states and also feasible within the time remaining for implementation.
   First, in paragraph (a), we proposed that the Exchange may satisfy the requirements of this subpart by either executing all eligibility functions, directly or through contracting arrangements described in 45 CFR 155.110(a), or through the use of a federally-managed service described in paragraph (b) of
   Second, in paragraph (b), we proposed that the Exchange may implement an eligibility determination for an exemption made by HHS, provided that the Exchange accepts the application, as specified in
   In paragraph (c), we proposed the standards to which the Exchange will adhere when eligibility determinations are made in accordance with paragraph (b) of this section. Such standards included that the arrangement does not increase administrative costs and burdens on individuals, or increase delay, and that applicable requirements under
   Comment: Commenters expressed general support for the proposals in
   Response: In response to comments seeking to limit the burden on Exchanges, and based on the operational capacity of the Exchange and HHS being able to comply with the statutory requirements to accept exemptions applications and issue eligibility determination notices for the first year of operations, we are modifying the proposed language regarding how the Exchange may rely on the use of an HHS service.
   We specify that for an application submitted prior to
   For an application submitted on or after
   We also note that comments regarding the appeals process for exemptions will be addressed in a future regulation. We expect that future rulemaking will clarify that if an Exchange relies on HHS to make an eligibility determination for an exemption, the Exchange may also rely on HHS to administer the exemptions appeals process as well, provided that any underlying decisions made by the Exchange are addressed through the appropriate Exchange appeals process.
Summary of Regulatory Changes
   We are modifying the provisions proposed in
g. Reporting (
   In SEC 155.630, we proposed to codify the provisions specified in section 1311(d)(4)(I)(i) of the Affordable Care Act regarding reporting by the Exchange to
   Comment: One commenter raised concerns about the lack of an
   Response: We recognize the commenter's concerns regarding the reporting process for exemptions. HHS continues to work closely with the
   Comment: One commenter recommended that HHS provide Exchanges flexibility to obtain and report taxpayer identification numbers, if relevant, rather than only SSNs as proposed. The commenter also wanted to ensure that this provision explicitly specifies that Exchanges will comply with existing confidentiality protections for individual tax information under the Affordable Care Act and section 6103 of the Code.
   Response: We maintain the language of the proposed regulation. We also note that in response to this comment, in order to limit the administrative burden on Exchanges associated with reporting to
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
h. Right To Appeal (
   In SEC 155.635, we proposed that the Exchange will include notice of the right to appeal and instructions for how to appeal in any notification issued in accordance with
   Comment: One commenter expressed concerns about individuals with access to eligible employer-sponsored coverage that would prevent an individual from receiving advance payments of the premium tax credit, while still leaving them subject to the shared responsibility payment. The commenter wanted the Exchange to have discretion through the appeals process to consider the totality of an applicant's circumstances. Another commenter urged HHS to specify that translation services are available for LEP individuals to ensure they have appropriate access to the appeals process, including the content of notices and requests for hearings.
   Response: Comments concerning the appeals process for exemptions will be addressed in future rulemaking.
Summary of Regulatory Changes
   We are finalizing the provisions proposed in
a. Definition of Minimum Essential Coverage (
   The proposed rule cross referenced the Treasury regulation under section 5000A of the Code for the definition of minimum essential coverage.
Summary of Regulatory Changes
   We made minor changes to the provisions of
b. Other Types of Coverage That Qualify as Minimum Essential Coverage (
   The proposed rule specifically designated the following types of coverage as minimum essential coverage for purposes of the Code: Self-funded student health insurance plans; foreign health coverage; Refugee Medical Assistance supported by the Administration for Children and Families (45 CFR Part 400 Subpart G);
   Under the proposed rule, state high risk pools were designated as minimum essential coverage for a period of time to be determined by the Secretary. We reserved the right to review and monitor the extent and quality of coverage, and in the future to reassess whether they should be designated minimum essential coverage or should be required to go through the process outlined in
   The comments and our responses are set forth below.
   Comment: Many commenters were concerned that the unregulated status of self-funded student health coverage may leave students unable to benefit from the protections of the Affordable Care Act, and that students who are offered a self-funded plan through their college or university may find it difficult or impossible to obtain coverage through the Exchanges and to access the Affordable Care Act premium and cost-sharing subsidies. These commenters conceded that some self-funded student health coverage is good coverage, but other plans do not provide adequate coverage. These commenters specifically cited annual and lifetime limits, prescription drug limits, pre-existing condition exclusions and rescissions as reasons that some self-funded student health coverage is not satisfactory coverage for many students. In contrast, other commenters stated their support for designating self-funded student health coverage as minimum essential coverage, citing the ACHA guidelines document, Standards for
   Response: After reviewing the comments regarding designating self-funded student health plans as minimum essential coverage for purposes of the Code, we agree that because self-funded student health plans can be varied in the types of benefits being provided, these plans should not be permanently designated as minimum essential coverage. In this final rule we designate self-funded student health coverage as minimum essential coverage for plan or policy years beginning on or before
   In the proposed rule we designated state high risk pools as minimum essential coverage for a transition period and solicited comments on whether state high risk pools should be recognized as minimum essential coverage. We did not receive any comments on state high risk pools and we are finalizing the proposed rule. To be consistent with the treatment of self-funded student health plans which under the final rule are designated as minimum essential coverage for plan or policy years beginning on or before
   Comment: Some commenters supported the designation of foreign health coverage as minimum essential coverage because foreign health coverage provides meaningful health care benefits to, legally admitted, non-citizens temporarily working in
   Response: We agree that the health care benefits provided by foreign governments or through foreign insurance for legally admitted non-citizens of
   Comment: Some commenters supported the designation of coverage provided by AmeriCorps programs to their AmeriCorps members as minimum essential coverage. They stated that the lack of an employer/employee relationship creates difficulties for programs seeking insurance on their own through traditional group insurance markets. Further, coverage provided by AmeriCorps programs to their AmeriCorps members has produced economies of scale and a solution to the accessibility challenges particular to smaller programs. Commenters also stated that the demographics and full funding of premiums by the program has led to stable claims experience.
   Other commenters opposed designating the coverage provided by AmeriCorps programs to AmeriCorps volunteers as minimum essential coverage because some of the provided benefits fall below the minimal coverage requirements required by the Affordable Care Act. In addition, commenters noted that stipends for most volunteers are between 100-200 percent FPL, meaning that they may either qualify for a premium assistance program or a hardship exemption.
   Response: In response to these comments concerning consumer protections, the final rule does not automatically designate coverage provided by AmeriCorps programs to AmeriCorps volunteers as minimum essential coverage. However, AmeriCorps coverage provided to volunteers may be recognized as minimum essential coverage through the certification process outlined in
   Comment: Several commenters urged HHS to recognize multi-share plans as minimum essential coverage. These commenters also requested that if multi-share plans were not designated as minimum essential coverage, that they be eligible to apply for recognition as minimum essential coverage. These commenters described the unique structure of multi-share plans, stating that these programs already meet the community needs of affordable health insurance; multi-share programs often focus on specific geographic areas or populations; and that multi-share plans are community funded, receive no federal subsidies and are a demonstrated alternative to traditional health insurance. Multi-share plans are designed to be coverage of last resort for low-income small businesses, students and individuals when other programs are unavailable.
   Response: While multi-share plans are not designated as minimum essential coverage in this final rule, HHS invites all multi-share organizations to apply for their coverage to be recognized as minimum essential coverage in the process outlined in
Summary of Regulatory Changes
   As proposed in the proposed rule, in
c. Requirements for Recognition as Minimum Essential Coverage for Types of Coverage Not Otherwise Designated Minimum Essential Coverage in the Statute or This Regulation (
   The proposed rule outlined a process by which other types of coverage could seek to be recognized as minimum essential coverage. Coverage recognized as minimum essential coverage through this process would need to offer substantially the same consumer protections as those enumerated in the Title I of Affordable Care Act relating to non-grandfathered, individual coverage to ensure consumers are receiving the protections of the Affordable Care Act. We solicited comments on the proposed "substantially comply" standard as it applies to other types of individual coverage. We also solicited comments on the process for recognizing other coverage as minimum essential coverage.
   In the proposed regulation, sponsors of minimum essential coverage must also meet other criteria specified by the Secretary. We solicited comments on the types of criteria the Secretary should consider in this process as well as whether they should be added to the final rule. We proposed that sponsors of a plan that seeks to have such coverage recognized as minimum essential coverage adhere to certain procedures. Sponsors would submit to HHS electronically the following information: (1) Name of the organization sponsoring the plan; (2) name and title of the individual who is authorized to make, and makes, this certification on behalf of the organization; (3) address of the individual named above; (4) phone number of the individual named above; (5) number of enrollees; (6) eligibility criteria; (7) cost sharing requirements, including deductible and out-of-pocket maximum; (8) essential health benefits covered (as defined in
   The comment and our response are set forth below.
   Comment: A commenter suggested that the process for designating coverage not otherwise designated as minimum essential coverage should include definitive timelines for the submission and consideration of each plan applying to be designated at minimum essential coverage, opportunities for such plans to exchange ideas with HHS, and an appeals process for plans that are denied.
   Response: We appreciate the commenter's suggestions regarding this process and we will take them under further consideration while developing this administrative process.
   As previously stated, we solicited comments on the types of criteria that the Secretary should require a sponsor to meet in order for HHS to recognize the coverage of the organization as minimum essential coverage and indicated that we might specify criteria for sponsoring organizations. We did not get any comments specifically addressing this issue, and we have decided that the focus of the CMS review of applications for health coverage to be recognized as minimum essential coverage will not be on the type of organization providing coverage but on the extent of the coverage itself and the protections provided in the coverage. We made minor changes to certification requirement to clarify that the organization must certify that the coverage substantially complies with the requirements of title I of the Affordable Care Act that apply to non-grandfathered plans in the individual market and the organization must submit any plan documentation or other information that demonstrate that the coverage substantially comply with these requirements.
Summary of Regulatory Changes
   We made minor changes to the provisions of
d.
   Under this proposed rule, HHS would have the ability to audit plans to ensure the accuracy of the certification either randomly or when triggered by certain information. We solicited comments on the proposed procedures and if and when audits should be conducted. We also solicited comments on whether sponsors of the types of coverage that have been designated as minimum essential coverage in the proposed rule should also submit the above information required to HHS.
   Under the proposed rule, once recognized as minimum essential coverage, a plan would have to provide notice to its enrollees, specifying that the plan has been recognized as minimum essential coverage for the purposes of the individual shared responsibility provision. The sponsor of any plan recognized as minimum essential coverage would also be required to provide the annual information reporting to the
   Comment: A commenter suggested that the process for designating coverage not otherwise designated as minimum essential coverage should include definitive timelines for the submission and consideration of each plan applying to be designated at minimum essential coverage, opportunities for such plans to exchange ideas with HHS, and an appeals process for plans that are denied.
   Response: We appreciate the commenter's suggestions regarding this process and we will take them under further consideration while developing this administrative process.
Summary of Regulatory Changes
   We made minor changes to the provisions of section 156.606 to clarify the meaning of the final regulation.
III. Provisions of the Final Regulation
   For the most part, this final rule incorporates the provisions of the proposed rule. Those provisions of this final rule that differ substantively from the proposed rule are as follows:
Changes to
    * Modifies eligibility standards for the religious conscience exemption such that if an exemption is provided to an individual under the age of 21, an exemption will be provided on a continuing basis until the month after the individual's 21st birthday, which triggers a corresponding notice and opportunity for the individual turning 21 to file another application to maintain this exemption.
    * Clarifies which hardship exemptions must be granted by the Exchange and which are available solely through the tax filing process.
    * Clarifies that hardship exemption under paragraph (g)(1) of this section must be granted for the month before, the month or months during which an individual experiences the circumstances that qualify as a hardship preventing him or her from purchasing a qualified health plan, and the month after.
    * Clarifies that an eligible employer-sponsored plan is only considered for the lack of affordable coverage based on projected income hardship exemption if it meets the minimum value standard.
    * Specifies how the Exchange will determine the required contribution to purchase coverage under an eligible employer-sponsored plan or in the individual market for the lack of affordable coverage based on projected income hardship exemption, including clarifying that in determining the required contribution for an eligible employer-sponsored plan, an individual who uses tobacco is treated as not earning any premium incentive related to participation in a wellness program designed to prevent or reduce tobacco use that is offered by an eligible employer-sponsored plan, and wellness incentives offered by an eligible employer-sponsored plan that do not relate to tobacco use are treated as not earned.
    * Clarifies that the lack of affordable coverage based on projected income hardship exemption is only available prospectively for the month or months of a calendar year after which the exemption is requested, and that it will be provided for all remaining months in a coverage year, notwithstanding any change in an individual's circumstances.
    * Adds a hardship exemption for any month in which an individual is an Indian eligible for services through an Indian health care provider, as defined in 42 CFR 447.50, or an individual eligible for services through the
Changes to
    * Clarifies that the Exchange must use information collected for purposes of the eligibility determination for enrollment in a QHP and for insurance affordability programs in making the exemption eligibility determination to the extent that the Exchange finds that such information is still applicable.
    * Specifies that at a minimum, the Exchange must provide a paper application process for applications submitted prior to
    * Clarifies that hardship exemptions can also be provided for previous tax years after
    * Clarifies that the Exchange will notify an individual to retain records that demonstrate the receipt of a certificate of exemption, as well as records demonstrating his or her qualification for the underlying exemption.
Changes to
    * Clarifies how the Exchange will address a situation in which an applicant attests to membership in a religious sect or division that is not recognized under section 1402(g)(1) of the Code.
    * Clarifies how the Exchange will address a situation in which an applicant attests to membership in an organization that is not known to the Exchange as a health care sharing ministry based on information provided by HHS.
    * Provides a process for establishing the list of health care sharing ministries that meet the statutory standards.
    * Clarifies that the Exchange will not find that an applicant's previous or current enrollment in health coverage is not reasonably compatible with his or her attestation of membership in a health care sharing ministry.
    * Clarifies that the Secretary of the Treasury will administer the exemptions specified in
    * Clarifies the applicability of verification procedures specified in 45 CFR subpart D to the lack of affordable coverage based on projected income hardship exemption.
    * Specifies that the Exchange will use the same verification procedures for the exemption for an individual who is eligible for services through an Indian health care provider as it will use for the exemption for members of a federally-recognized tribe.
    * Clarifies when an inconsistency process should be triggered when certain data sources are not reasonably expected to be available.
    * Allows an applicant 90 days to present satisfactory documentary evidence to resolve an inconsistency.
    * Specifies how an Exchange must validate a
Changes to
    * Specifies that the Exchange will not conduct mid-year redeterminations for the hardship exemption for an individual who has a lack of affordable coverage based on projected household income, will not require individuals receiving this exemption to report changes, and will not send periodic reminders to report changes to individuals who have this exemption.
    * Specifies that the Exchange will implement a change resulting from a redetermination under this section for the month or months after the month in which the redetermination occurs, such that a certificate that was provided for the month in which the redetermination occurs, and for prior months remains effective.
Changes to
    * Specifies that for applications submitted before
Changes to
    * Clarifies that an Exchange relying on HHS to make eligibility determinations for exemptions will not issue the eligibility notice for applications submitted prior to
Changes to
    * Makes minor changes to the provisions of 45 CFR SEC 156.600 to clarify the meaning of the regulation.
Changes to
    * Designates self-funded student health plans and state high risk pools as minimum essential coverage for a one year transitional period, and allows self-funded student health plans and state high risk pools to apply to be recognized as minimum essential coverage through the process outlined in
    * Removes the designation of foreign health coverage and AmeriCorps as minimum essential coverage. In order to be recognized as minimum essential coverage, foreign health coverage and coverage for AmeriCorps must follow the process for recognition explained in
Changes to
    * Makes minor changes to the provisions of
Changes to
    * Makes minor changes to the provisions of 45 CFR SEC 156.606 to clarify the meaning of the regulation.
IV. Collection of Information Requirements
   The final rule entitled "Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions" finalizes standards with regard to the minimum function of an Exchange to perform eligibility determinations and issue certificates of exemption from the individual shared responsibility payment. The rule also finalizes standards related to eligibility for exemptions, including the verification and eligibility determination process, eligibility redeterminations, options for conducting eligibility determinations, and reporting related to exemptions. In addition, the rule finalizes rules designating certain types of coverage as minimum essential coverage and outlining substantive and procedural requirements that other types of coverage must fulfill in order to be recognized as minimum essential coverage under section 5000A(f)(5) of the Code.
   This section outlines the information collection requirements in the proposed regulation on which we solicited public comment in the exemptions proposed rule. We used data from the
   Finally, this final rule describes an information collection requirement for which we did not solicit public comment in the exemptions proposed rule. The information collection requirement related to Health Care Sharing Ministries will be addressed through a separate notice and comment process under the Paperwork Reduction Act (PRA).
1. Exemption Application (
   Throughout this subpart, we specify that the Exchange will collect attestations from applicants for a certificate of exemption. These attestations will be collected using the application described in
   FOOTNOTE 3 The estimates may be found in the information collection request entitled, "Data Collection to Support Eligibility Determinations for Insurance Affordability Programs and Enrollment through Affordable Insurance Exchanges,
   FOOTNOTE 4
   FOOTNOTE 5
   We do not estimate any cost to the Exchanges of evaluating the exemption applications. For the purposes of this estimate, we expect all applications to be submitted electronically and processed through the system, which would result in no additional labor costs to evaluate and review the exemption applications. We requested comment on this assumption.
   We estimate that the cost to develop the exemption application will be significantly less than the estimated cost of developing the coverage application because the coverage application takes into account additional factors necessary in order to perform eligibility determinations for insurance affordability programs. We also note that as with the coverage application, HHS will be releasing a model application for use by Exchanges, which will significantly decrease the burden associated with the implementation of the application. On average, we estimate that the implementation of the exemption application will take approximately 1,059 hours of software development at a labor cost of
2. Notices (SUBSEC 155.610, 155.615, 155.620)
   Several provisions in subpart G outline specific notices that the Exchange will send to individuals during the exemption eligibility determination process, including the notice of eligibility determination described in
   We expect that the exemption eligibility determination notice will be dynamic and include information tailored to all possible outcomes of an application throughout the eligibility determination process. A health policy analyst, senior manager, and an attorney would review the notice. HHS is currently developing model notices, which will decrease the burden on Exchanges associated with developing such notices. If a state opts to use the model notices provided by HHS, we estimate that the Exchange effort related to the development and implementation of the exemption eligibility determination notice will necessitate 44 hours from a health policy analyst at an hourly cost of
   We expect that the burden on the Exchange to maintain this notice will be significantly lower than to develop it. We estimate that it will take each professional approximately a quarter of the time to maintain the notice as compared to developing the notice. Accordingly, we estimate the maintenance of the eligibility determination notice in subsequent years will necessitate 11 hours from a health policy analyst at an hourly cost of
   Pursuant to section 5000A of the Code, the
3. Electronic Transmissions (SUBSEC 155.615, 155.630)
   Section 155.615 specifies that the Exchange will utilize applicable procedures established under subpart D of the Exchange final rule in order to obtain data through electronic data sources for purposes of determining eligibility for and granting certificates of exemption. This involves the electronic transmission of data through procedures established under subpart D in order to verify an applicant's incarceration status, to verify eligibility for qualifying coverage in an eligible employer-sponsored plan, and to determine eligibility for advance payments of the premium tax credit. Section 155.615 also includes additional electronic transmissions that are specific to the eligibility process for exemptions, including those related to health care sharing ministries and religious conscience. In section 155.630, we proposed that the Exchange will provide relevant information to
4. Verification and Change Reporting (SUBSEC 155.615, 155.620)
   The Exchange will use the same verification processes for new applications and for changes that are reported during the year. This includes the process for situations in which the Exchange is unable to verify the information necessary to determine an applicant's eligibility, which is described in section 155.615(g). It is not possible at this time to provide estimates for the number of applicants for whom additional information will be required to complete an eligibility determination, but we anticipate that this number will decrease as applicants become more familiar with the eligibility process for exemptions and as more data become available electronically. As such, for now, we estimate the burden associated with the processing of documentation for one submission from an applicant. We note that the burden associated with this provision is one hour for an individual to collect and submit documentation, and 12 minutes for eligibility support staff at an hourly cost of
5. ICRs Regarding Health Care Sharing Ministries (
   In order to facilitate the provision of an exemption for membership in a health care sharing ministry to the members of such ministry, we specify in
6. ICRs Regarding Agreements (
   These provisions specify that an Exchange that decides to utilize the HHS service for making eligibility determinations for exemptions for application submitted on or after
   The burden associated with these provisions is the time and effort necessary for the Exchange to establish an agreement with HHS. We estimate that the creation of the necessary agreement will necessitate 35 hours from a health policy analyst at an hourly cost of
7. ICRs Regarding Minimum Essential Coverage (SUBSEC 156.604(a)(3), 156.604(d))
   Organizations that currently provide health coverage that are not statutorily specified and not designated as minimum essential coverage in this regulation may submit a request to CMS that their coverage be recognized as minimum essential coverage. As described in
   We sought comments on how many organizations are likely to submit such requests but did not receive any information that would allow us to estimate the number of requests. We assume that at least 10 organizations will submit such a request. The burden associated with this certification includes the time needed to collect and input the necessary plan information, and maintain a copy for recordkeeping by clerical staff and for a manager and legal counsel to review it and for a senior executive to review and sign it. The certification and attachments will be submitted to CMS electronically at minimal cost. We estimate that it will take a combined total of 5.25 hours (4 hours for clerical staff at an hourly cost of
   Section 156.604(d) specifies that sponsoring organizations whose health coverage are recognized as minimum essential coverage will have to provide a notice to enrollees informing them that the plan has been recognized as minimum essential coverage for the purposes of the Code. The notice requirement may be satisfied by inserting a statement into existing plan documents. Plan documents are usually reviewed and updated annually before a new plan year begins. Sponsoring organizations may insert the statement in their plan documents at that time at minimal cost. Once the notice is included in the plan documents the first year, no additional cost will be incurred in future years. Therefore this notice is not subject to the Paperwork Reduction Act of 1995. Commenters suggested that a sponsoring organization should be required to provide a notice to enrollees if its request is denied and its plan is not recognized as minimum essential coverage. To minimize the burden on sponsoring organizations, we are not requiring such a notice.
   The sponsor of any type of coverage recognized as minimum essential coverage is also required to provide the annual information reporting to the
Table 1--Annual Information Collection Requirements Regulation Description Number of Number of Burden per Total section(s) respondents responses response annual (hours) burden (hours) S. 155.610 Application 18 18 1,059 19,062 Development S. 155.610 Application 12,000,000 12,000,000 0.27 3,200,000 Completion SS 155.610, Notice 18 18 125 2,250 155.620 Development and Maintenance S. 155.620 Change 1 1 0.2 0.2 Reporting S. 155.625 Agreements 18 18 105 1,890 SS Minimum 10 10 5.25 52.5 156.604(a)(3) Essential Coverage Certification Total 3,223,255
C. Submission of PRA-Related Comments
   We have submitted a copy of this final rule to OMB for its review of the rule's information collection and recordkeeping requirements. These requirements are not effective until they have been approved by OMB.
   To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, access the CMS Web site at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html, or call the Reports Clearance Office at 410-786-1326.
V. Summary of Regulatory Impact Statement
A. Summary
   As stated earlier in this preamble, this final rule implements certain functions of the Exchanges. These specific statutory functions include determining eligibility for and granting certificates of exemption from the individual shared responsibility payment described in section 5000A of the Internal Revenue Code. Additionally, this final rule implements the responsibility of the Secretary of
   HHS has crafted this rule to implement the protections intended by
B. Executive Orders 13563 and 12866
   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,
   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
   A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects (
1. Need for Regulatory Action
   This final rule sets forth standards and processes under which the Exchange will conduct eligibility determinations for and grant certificates of exemption from the individual shared responsibility payment. Furthermore, it supports and complements rulemaking conducted by the Secretary of the Treasury with respect to section 5000A of the Code, as added by section 1501(b) of the Affordable Care Act. The intent of this rule is to implement the relevant provisions while continuing to afford states substantial discretion in the design and operation of an Exchange, with greater standardization provided where directed by the statute or where there are compelling practical, efficiency, or consumer protection reasons. In addition, this final rule provides standards for determining whether certain other types of health insurance coverage constitute minimum essential coverage and procedures for sponsors to follow for a plan to be identified as minimum essential coverage under section 5000A of the Code. This rule also designates certain types of existing health coverage as minimum essential coverage. Other types of coverage, not statutorily specified and not designated as minimum essential coverage in this regulation, may be recognized as minimum essential coverage if certain substantive and procedural requirements are met as set forth in this rule.
2. Summary of Impacts
   In developing this final rule, HHS carefully considered its potential effects including costs and benefits. Because of data limitations, HHS did not attempt to quantify the benefits, costs and transfers resulting from this final rule. Nonetheless, HHS was able to identify several potential impacts which are discussed qualitatively below.
   The exemption provisions of this final rule set forth how and what exemptions can be received through the Exchange. Given the statute, these rules would generate exemption request activity; the final rules could also potentially affect the amount of shared responsibility payments made in a given year and the number of individuals who would enroll in health insurance plans to avoid shared responsibility payments. The impact of the minimum essential coverage provisions would be similar; individuals whose coverage would be designated minimum essential coverage, under the authority of the Secretary of
   As noted in our discussion, above, of information collection requirements, while CBO estimates that 24 million individuals would be exempt from the penalty in 2016, it is unclear how many individuals will seek these exemptions from an Exchange. These submissions would be associated with a variety of effects, including: costs to Exchanges to review the exemption requests; costs to applicants to request exemptions and retain documents; potential effects on enrollment in health coverage and its benefits; and a transfer from the federal government to individuals receiving exemptions in cases in which there is a foregone shared responsibility payment.
   We note that the cost to an applicant of submitting a request and retaining documents is bounded by the expected shared responsibility payment; otherwise, he or she would not necessarily apply for the exemption. Though we lack data to precisely characterize the effects of these provisions, we note that the potential number of individuals seeking exemptions through the Exchange could place the overall impact of the final rule over the
   The minimum essential coverage provisions included in this final rule could lead to transfers from the federal government to affected individuals (in this case, individuals whose coverage is designated to be minimum essential coverage) and have effects on health coverage enrollment (for example, decreased switching between plans). Decreased switching between plans would entail time savings for affected individuals and uncertain effects on premium payments and use of medical services and products. We currently lack data to estimate the number of individuals whose coverage would be designated minimum essential coverage by this rule.
C. Alternatives Considered
   Under the Executive Order, HHS is required to consider alternatives to issuing rules and alternative regulatory approaches. HHS considered the regulatory alternatives below:
1. Grant Certificates for All Categories of Exemptions
   Section 155.605 provides the eligibility standards for exemptions that will be granted by the Exchange. The preamble to this section notes that Exchanges will not grant certificates of exemption in four categories: (1) Lack of affordable coverage; (2) household income below the filing threshold; (3) not lawfully present; and (4) short coverage gaps. Also, Exchanges will not grant certificates of exemptions for certain hardship exemptions, specifically
   The alternative model would specify that the Exchange would provide certificates of exemption in all nine categories described in section 5000A of the Code. This alternative model was not selected for practical and administrative reasons; the specific reasons for taking this approach are discussed in the preamble associated with this section of the final regulation. For example, for certain categories of exemptions, the information needed will only be available on a retrospective basis, and is most efficiently available through the tax filing process. Thus, we believe that the least burdensome approach for individuals and Exchanges is to make these exemptions available only through the tax filing process.
2. Designation of State High Risk Pools, Self-Funded Student Health Plans and AmeriCorps as Minimum Essential Coverage
   We considered designating state high risk pools, self-funded student health plans, foreign health coverage and AmeriCorps as minimum essential coverage in section 156.602. After careful review of comments received, state high risk pools and self-funded student health plans will be designated as minimum essential coverage for plan or policy years beginning on or before
VI. Regulatory Flexibility Act
   The Regulatory Flexibility Act (5 U.S.C.
VII. Unfunded Mandates
   Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of
VIII. Federalism
   Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct effects on states, preempts state law, or otherwise has federalism implications. We note again that the impact of changes related to implementation of the Affordable Care Act was described in the RIA associated with the Exchange final rule. As discussed in the Exchange final rule RIA, we have consulted with states to receive input on how the various Affordable Care Act provisions codified in this proposed rule would affect states.
   Because states have flexibility in designing their Exchange, state decisions will ultimately influence both administrative expenses and overall premiums. However, because states are not required to create an Exchange, these costs are not mandatory. For states electing to create an Exchange, the initial costs of the creation of the Exchange will be funded by Exchange Planning and Establishment Grants. After this time, Exchanges will be financially self-sustaining with revenue sources left to the discretion of the state. In the Department's view, while this proposed rule does not impose substantial direct costs on state and local governments, it has federalism implications due to direct effects on the distribution of power and responsibilities among the state and federal governments relating to determining standards relating to health insurance coverage (that is, for QHPs) that is offered in the individual and small group markets. Each state electing to establish a state-based Exchange must adopt the federal standards contained in the Affordable Care Act and in this proposed rule, or have in effect a state law or regulation that implements these federal standards. However, the Department anticipates that the federalism implications (if any) are substantially mitigated because states have choices regarding the structure and governance of their Exchanges. Additionally, the Affordable Care Act does not require states to establish an Exchange; but if a state elects not to establish an Exchange or the state's Exchange is not approved, HHS, will establish and operate an Exchange in that state. Additionally, states will have the opportunity to participate in state Partnership Exchanges that would allow states to leverage work done by other states and the federal government, and will be able to leverage a federally-managed service for eligibility determination for exemptions.
   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 Department has engaged in efforts to consult with and work cooperatively with affected states, including participating in conference calls with and attending conferences of the
   Pursuant to the requirements set forth in section 8(a) of Executive Order 13132, and by the signatures affixed to this regulation, the Department certifies that CMS has complied with the requirements of Executive Order 13132 for the attached final regulation in a meaningful and timely manner.
IX. Congressional Review Act
   This rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C.
List of Subjects
   45 CFR Part 155
   Administrative practice and procedure, Advertising, Brokers, Conflict of interest, Consumer protection, Grant programs--health, Grants administration, Health care, Health insurance, Health maintenance organization (HMO), Health records, Hospitals, Indians, Individuals with disabilities, Loan programs-health, Organization and functions (Government agencies),
   45 CFR Part 156
   Administrative practice and procedure, Advertising, Advisory committees, Brokers, Conflict of interest, Consumer protection, Grant programs--health, Grants administration, Health care, Health insurance, Health maintenance organization (HMO), Health records, Hospitals, Indians, Individuals with disabilities, Loan programs-health, Organization and functions (Government agencies),
   For the reasons set forth in the preamble, the
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED STANDARDS UNDER THE AFFORDABLE CARE ACT
   1. The authority citation for part 155 continues to read as follows:
   Authority: Title I of the Affordable Care Act, sections 1301, 1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1334, 1402, 1411, 1412, 1413, Pub. L. 111-148, 124
   2. Amend
* * * * *
   Applicant means:
   (1) An individual who is seeking eligibility for him or herself through an application submitted to the Exchange, excluding those individuals seeking eligibility for an exemption from the individual shared responsibility payment pursuant to subpart G of this part, or transmitted to the Exchange by an agency administering an insurance affordability program for at least one of the following:
* * * * *
   Application filer means an applicant, an adult who is in the applicant's household, as defined in 42 CFR 435.603(f), or family, as defined in 26 CFR 1.36B-1(d), an authorized representative of an applicant, or if the applicant is a minor or incapacitated, someone acting responsibly for an applicant, excluding those individuals seeking eligibility for an exemption from the individual shared responsibility payment pursuant to subpart G of this part.
* * * * *
   3. In
   (a) General requirements. The Exchange must perform the minimum functions described in this subpart and in subparts D,
* * * * *
   4. Add subpart G to part 155 to read as follows:
Subpart G--Exchange Functions in the Individual Market: Eligibility Determinations for Exemptions.
Sec.
155.600 Definitions and general requirements.
155.605 Eligibility standards for exemptions.
155.610 Eligibility process for exemptions.
155.615 Verification process related to eligibility for exemptions.
155.620 Eligibility redeterminations for exemptions during a calendar year.
155.625 Options for conducting eligibility determinations for exemptions.
155.630 Reporting.
155.635 Right to appeal.
Subpart G--Exchange Functions in the Individual Market: Eligibility Determinations for Exemptions
   (a) Definitions. For purposes of this subpart, the following terms have the following meaning:
   Applicant means an individual who is seeking an exemption for him or herself through an application submitted to the Exchange.
   Application filer means an applicant, an individual who is liable for the shared responsibility payment in accordance with section 5000A of the Code for an applicant, an authorized representative, or if the applicant is a minor or incapacitated, someone acting responsibly for an applicant.
   Exemption means an exemption from the shared responsibility payment.
   Health care sharing ministry has the same meaning as it does in section 5000A(d)(2)(B)(ii) of the Code.
   Indian tribe has the same meaning as it does in section 45A(c)(6) of the Code.
   Required contribution has the same meaning as it does in section 5000A(e)(1)(B) of the Code.
   Shared responsibility payment means the payment imposed with respect to a non-exempt individual who does not maintain minimum essential coverage in accordance with section 5000A(b) of the Code.
   Tax filer has the same meaning as it does in
   (b) Attestation. For the purposes of this subpart, any attestation that an applicant is to provide under this subpart may be made by the application filer on behalf of the applicant.
   (c) Reasonably compatible. For purposes of this subpart, the Exchange must consider information through electronic data sources, other information provided by the applicant, or other information in the records of the Exchange to be reasonably compatible with an applicant's attestation if the difference or discrepancy does not impact the eligibility of the applicant for the exemption or exemptions for which he or she applied.
   (d) Accessibility. Information, including notices, forms, and applications, must be provided to applicants in accordance with the standards specified in
   (e) Notices. Any notice required to be sent by the Exchange to an individual in accordance with this subpart must be provided in accordance with the standards specified in
   (a) Eligibility for an exemption through the Exchange. Except as specified in paragraph (g) of this section, the Exchange must determine an applicant eligible for and issue a certificate of exemption for any month if the Exchange determines that he or she meets the requirements for one or more of the categories of exemptions described in this section for at least one day of the month.
   (b) Duration of single exemption. Except as specified in paragraphs (c)(2), (f)(2), and (g) of this section, the Exchange may provide a certificate of exemption only for the calendar year in which an applicant submitted an application for such exemption.
   (c) Religious conscience. (1) The Exchange must determine an applicant eligible for an exemption for any month if the applicant is a member of a recognized religious sect or division described in section 1402(g)(1) of the Code, and an adherent of established tenets or teachings of such sect or division, for such month in accordance with section 5000A(d)(2)(A) of the Code.
   (2) Duration of exemption for religious conscience. (i) The Exchange must grant the certificate of exemption specified in this paragraph to an applicant who meets the standards provided in paragraph (c)(1) of this section for a month on a continuing basis, until the month after the month of the individual's 21st birthday, or until such time that an individual reports that he or she no longer meets the standards provided in paragraph (c)(1) of this section.
   (ii) If the Exchange granted a certificate of exemption in this category to an applicant prior to his or her reaching the age of 21, the Exchange must send the applicant a notice upon reaching the age of 21 informing the applicant that he or she must submit a new exemption application to maintain the certificate of exemption.
   (3) The Exchange must make an exemption in this category available prospectively or retrospectively.
   (d) Membership in a health care sharing ministry. (1) The Exchange must determine an applicant eligible for an exemption for a month if for such month the applicant is a member of a health care sharing ministry as defined in section 5000A(d)(2)(B)(ii) of the Code.
   (2) The Exchange must make an exemption in this category available only retrospectively.
   (e) Incarceration. (1) The Exchange must determine an applicant eligible for an exemption for a month if he or she meets the standards in section 5000A(d)(4) of the Code for such month.
   (2) The Exchange must make an exemption in this category available only retrospectively.
   (f) Membership in an Indian tribe. (1) The Exchange must determine an applicant eligible for an exemption for any month if he or she is a member of an Indian tribe, as defined in section 45A(c)(6) of the Code, for such month, as provided in section 5000A(e)(3) of the Code.
   (2) Duration of exemption for membership in an Indian tribe. The Exchange must grant the exemption specified in this paragraph to an applicant who meets the standards specified in paragraph (f)(1) of this section for a month on a continuing basis, until such time that the applicant reports that he or she no longer meets the standards provided in paragraph (f)(1) of this section.
   (3) The Exchange must make an exemption available in this category prospectively or retrospectively.
   (g) Hardship --(1) General. The Exchange must grant a hardship exemption to an applicant eligible for an exemption for at least the month before, a month or months during which, and the month after, if the Exchange determines that--
   (i) He or she experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan;
   (ii) The expense of purchasing a qualified health plan would have caused him or her to experience serious deprivation of food, shelter, clothing or other necessities; or
   (iii) He or she has experienced other circumstances that prevented him or her from obtaining coverage under a qualified health plan.
   (2) Lack of affordable coverage based on projected income. The Exchange must determine an applicant eligible for an exemption for a month or months during which he or she, or another individual the applicant attests will be included in the applicant's family, as defined in 26 CFR 1.36B-1(d), is unable to afford coverage in accordance with the standards specified in section 5000A(e)(1) of the Code, provided that--
   (i) Eligibility for this exemption is based on projected annual household income;
   (ii) An eligible employer-sponsored plan is only considered under paragraphs (g)(2)(iii) and (iv) of this section if it meets the minimum value standard described in
   (iii) For an individual who is eligible to purchase coverage under an eligible employer-sponsored plan, the Exchange determines the required contribution for coverage such that--
   (A) An individual who uses tobacco is treated as not earning any premium incentive related to participation in a wellness program designed to prevent or reduce tobacco use that is offered by an eligible employer-sponsored plan;
   (B) Wellness incentives offered by an eligible employer-sponsored plan that do not relate to tobacco use are treated as not earned;
   (C) In the case of an employee who is eligible to purchase coverage under an eligible employer-sponsored plan sponsored by the employee's employer, the required contribution is the portion of the annual premium that the employee would pay (whether through salary reduction or otherwise) for the lowest cost self-only coverage.
   (D) In the case of an individual who is eligible to purchase coverage under an eligible employer-sponsored plan as a member of the employee's family, as defined in 26 CFR 1.36B-1(d), the required contribution is the portion of the annual premium that the employee would pay (whether through salary reduction or otherwise) for the lowest cost family coverage that would cover the employee and all other individuals who are included in the employee's family who have not otherwise been granted an exemption through the Exchange.
   (iv) For an individual who is ineligible to purchase coverage under an eligible employer-sponsored plan, the Exchange determines the required contribution for coverage in accordance with section 5000A(e)(1)(B)(ii) of the Code, inclusive of all members of the family, as defined in 26 CFR 1.36B-1(d), who have not otherwise been granted an exemption through the Exchange and who are not treated as eligible to purchase coverage under an eligible employer-sponsored plan, in accordance with paragraph (g)(2)(ii) of this section; and
   (v) The applicant applies for this exemption prior to the last date on which he or she could enroll in a QHP through the Exchange for the month or months of a calendar year for which the exemption is requested.
   (vi) The Exchange must make an exemption in this category available prospectively, and provide it for all remaining months in a coverage year, notwithstanding any change in an individual's circumstances.
   (3) Filing threshold. The
   (4) Ineligible for
   (5) Self-only coverage in an eligible employer-sponsored plan. The
   (6) Eligible for services through an Indian health care provider. (i) The Exchange must determine an applicant eligible for an exemption for any month if he or she is an Indian eligible for services through an Indian health care provider, as defined in 42 CFR 447.50 and not otherwise eligible for an exemption under paragraph (f) of this section, or an individual eligible for services through the
   (ii) The Exchange must grant the exemption specified in paragraph (g)(6) of this section to an applicant who meets the standards specified in paragraph (g)(6) of this section for a month on a continuing basis, until such time that the applicant reports that he or she no longer meets the standards provided in paragraph (g)(6) of this section.
   (a) Application. Except as specified in paragraphs (b) and (c) of this section, the Exchange must use an application established by HHS to collect information necessary for determining eligibility for and granting certificates of exemption as described in
   (b) Alternative application. If the Exchange seeks to use an alternative application, such application, as approved by HHS, must request the minimum information necessary for the purposes identified in paragraph (a) of this section.
   (c) Exemptions through the eligibility process for coverage. If an individual submits the application described in
   (d) Filing the exemption application. The Exchange must--
   (1) Accept the application from an application filer; and
   (2) Provide the tools to file an application.
   (3) For applications submitted before
   (e) Collection of Social Security Numbers. (1) The Exchange must require an applicant who has a
   (2) The Exchange may not require an individual who is not seeking an exemption for himself or herself to provide a
   (3) The Exchange must require an application filer to provide the
   (f) Determination of eligibility; granting of certificates. The Exchange must determine an applicant's eligibility for an exemption in accordance with the standards specified in
   (g) Timeliness standards. (1) The Exchange must determine eligibility for exemption promptly and without undue delay.
   (2) The Exchange must assess the timeliness of eligibility determinations made under this subpart based on the period from the date of application to the date the Exchange notifies the applicant of its decision.
   (h) Exemptions for previous tax years. (1) Except for the exemptions described in
   (2) The Exchange will only accept an application for an exemption described in
   (i) Notification of eligibility determination for exemptions. The Exchange must provide timely written notice to an applicant of any eligibility determination made in accordance with this subpart. In the case of a determination that an applicant is eligible for an exemption, this notification must include the exemption certificate number for the purposes of tax administration.
   (j) Retention of records for tax compliance. (1) An Exchange must notify an individual to retain the records that demonstrate receipt of the certificate of exemption and qualification for the underlying exemption.
<p>   (2) In the case of any factor of eligibility that is verified through use of the special circumstances exception described in
   (a) General rule. Unless a request for modification is granted under paragraph (i) of this section, the Exchange must verify or obtain information as provided in this section in order to determine that an applicant is eligible for an exemption.
   (b) Verification related to exemption for religious conscience. For any applicant who requests an exemption based on religious conscience, the Exchange must verify that he or she meets the standards specified in
   (1) Except as specified in paragraph (b)(2) of this section, accepting a form that reflects that he or she is exempt from
   (2) Except as specified in paragraphs (b)(3) and (4) of this section, accepting his or her attestation of membership in a religious sect or division, and verifying that the religious sect or division to which the applicant attests membership is recognized by the
   (3) If information provided by an applicant regarding his or her membership in a religious sect or division is not reasonably compatible with other information provided by the individual or in the records of the Exchange, the Exchange must follow the procedures specified in paragraph (g) of this section.
   (4) If an applicant attests to membership in a religious sect or division that is not recognized by the
   (c) Verification related to exemption for membership in a health care sharing ministry. (1) For any applicant who requests an exemption based on membership in a health care sharing ministry, the Exchange must verify that the applicant meets the standards specified in
   (i) If information provided by an applicant regarding his or her membership in a health care sharing ministry is not reasonably compatible with other information provided by the individual or in the records of the Exchange, the Exchange must follow the procedures specified in paragraph (g) of this section. The Exchange may not consider an applicant's prior or current enrollment in health coverage as not reasonably compatible with an applicant's attestation of membership in a health care sharing ministry.
   (ii) If an applicant attests to membership in a health care sharing ministry that is not known to the Exchange as a health care sharing ministry based on information provided by HHS, the Exchange must provide the applicant with information regarding how an organization can pursue recognition under
   (2) To be considered a health care sharing ministry for the purposes of this subpart, an organization must submit information to HHS that substantiates the organization's compliance with the standards specified in section 5000A(d)(2)(B)(ii) of the Code. If at any time HHS determines that an organization previously considered a health care sharing ministry for the purposes of this subpart no longer meets the standards specified in section 5000A(d)(2)(B)(ii) of the Code, HHS may revoke its earlier decision regarding the status of the health care sharing ministry.
   (d) Verification related to exemption for incarceration. (1) For any applicant who provides information attesting that he or she was incarcerated for a given month in accordance with the standards specified in
   (2) To the extent that the Exchange is unable to verify an applicant's attestation that he or she was incarcerated for a given month in accordance with the standards specified in
   (e) Verification related to exemption for members of Indian tribes. (1) For any applicant who provides information attesting that he or she is a member of an Indian tribe, the Exchange must use the process outlined in
   (2) To the extent that the Exchange is unable to verify an applicant's status as a member of an Indian tribe through the process described in
   (f) Verification related to exemption for hardshi-- (1) In general. For any applicant who requests an exemption based on hardship, except for the hardship exemptions described in
   (2) Lack of affordable coverage based on projected income. (i) For any applicant who requests an exemption based on the hardship described in
   (ii) The Exchange must accept an application filer's attestation for an applicant regarding eligibility for minimum essential coverage other than through an eligible employer-sponsored plan, instead of following the procedures specified in
   (3) Eligible for services through an Indian health care provider. For any applicant who requests an exemption based on the hardship described in
   (4) To the extent that the Exchange is unable to verify any of the information needed to determine an applicant's eligibility for an exemption based on hardship, the Exchange must follow the procedures specified in paragraph (g) of this section.
   (g) Inability to verify necessary information. Except as otherwise specified in this subpart, for an applicant for whom the Exchange cannot verify information required to determine eligibility for an exemption, including but not limited to when electronic data is required in accordance with this subpart but data for individuals relevant to the eligibility determination for an exemption are not included in such data sources or when electronic data is required but it is not reasonably expected that data sources will be available within the time period as specified in
   (1) Must make a reasonable effort to identify and address the causes of such inconsistency, including typographical or other clerical errors, by contacting the application filer to confirm the accuracy of the information submitted by the application filer;
   (2) If unable to resolve the inconsistency through the process described in paragraph (g)(1) of this section, must--
   (i) Provide notice to the applicant regarding the inconsistency; and
   (ii) Provide the applicant with a period of 90 days from the date on which the notice described in paragraph (g)(2)(i) of this section is sent to the applicant to either present satisfactory documentary evidence via the channels available for the submission of an application, as described in
   (3) May extend the period described in paragraph (g)(2)(ii) of this section for an applicant if the applicant demonstrates that a good faith effort has been made to obtain the required documentation during the period.
   (4) During the period described in paragraph (g)(1) and (g)(2)(ii) of this section, must not grant a certificate of exemption based on the information subject to this paragraph.
   (5) If, after the period described in paragraph (g)(2)(ii) of this section, the Exchange remains unable to verify the attestation, the Exchange must determine the applicant's eligibility for an exemption based on any information available from the data sources used in accordance with this subpart, if applicable, unless such applicant qualifies for the exception provided under paragraph (h) of this section, and notify the applicant of such determination in accordance with the notice requirements specified in
   (h) Exception for special circumstances. For an applicant who does not have documentation with which to resolve the inconsistency through the process described in paragraph (g)(2) of this section because such documentation does not exist or is not reasonably available and for whom the Exchange is unable to otherwise resolve the inconsistency, the Exchange must provide an exception, on a case-by-case basis, to accept an applicant's attestation as to the information which cannot otherwise be verified along with an explanation of circumstances as to why the applicant does not have documentation.
   (i) Flexibility in information collection and verification. HHS may approve an Exchange Blueprint in accordance with
   (j) Applicant information. The Exchange may not require an applicant to provide information beyond the minimum necessary to support the eligibility process for exemptions as described in this subpart.
   (k) Validation of
   (2) To the extent that the Exchange is unable to validate an individual's
   (a) General requirement. The Exchange must redetermine the eligibility of an individual with an exemption granted by the Exchange if it receives and verifies new information reported by such an individual, except for the exemption described in
   (b) Requirement for individuals to report changes. (1) Except as specified in paragraph (b)(2) of this section, the Exchange must require an individual who has a certificate of exemption from the Exchange to report any change with respect to the eligibility standards for the exemption as specified in
   (2) The Exchange must allow an individual with a certificate of exemption to report changes via the channels available for the submission of an application, as described in
   (c) Verification of reported changes. The Exchange must--
   (1) Verify any information reported by an individual with a certificate of exemption in accordance with the processes specified in
   (2) Notify an individual in accordance with
   (3) Provide periodic electronic notifications regarding the requirements for reporting changes and an individual's opportunity to report any changes, to an individual who has a certificate of exemption for which changes must be reported in accordance with
   (d) Effective date of changes. The Exchange must implement a change resulting from a redetermination under this section for the month or months after the month in which the redetermination occurs, such that a certificate that was provided for the month in which the redetermination occurs, and for prior months remains effective.
   (a) Options for conducting eligibility determinations. The Exchange may satisfy the requirements of this subpart--
   (1) Directly or through contracting arrangements in accordance with
   (b) Use of HHS service. Notwithstanding the requirements of this subpart--
   (1) For an application submitted before
   (i) The Exchange adheres to the eligibility determination made by HHS;
   (ii) The Exchange furnishes to HHS any information available through the Exchange that is necessary for an applicant to utilize the process administered by HHS; and
   (iii) The Exchange call center and Internet Web site specified in
   (2) For an application submitted on or after
   (i) The Exchange accepts the application, as specified in
   (ii) Verifications and other activities required in connection with eligibility determinations for exemptions are performed by the Exchange in accordance with the standards identified in this subpart or by HHS in accordance with the agreement described in paragraph (b)(2)(v) of this section;
   (iii) The Exchange transmits to HHS promptly and without undue delay and via secure electronic interface, all information provided as a part of the application or update that initiated the eligibility determination, and any information obtained or verified by the Exchange;
   (iv) The Exchange adheres to the eligibility determination made by HHS; and
   (v) The Exchange and HHS enter into an agreement specifying their respective responsibilities in connection with eligibility determinations for exemptions.
   Requirement to provide information related to tax administration. If the Exchange grants an individual a certificate of exemption in accordance with
   (a) The individual's name,
   (b) Any other information required in guidance published by the Secretary of the Treasury in accordance with 26 CFR 601.601(d)(2).
   (a) For an application submitted before
   (b) For an application submitted on or after
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
   5. The authority citation for part 156 is revised to read as follows:
   Authority: Title I of the Affordable Care Act, Sections 1301-1304, 1311-1312, 1321, 1322, 1324, 1334, 1341-1343, and 1401-1402, 1501, Pub. L. 111-148, 124
   6. Add subpart G to part 156 to read as follows:
Subpart G--Minimum Essential Coverage
Sec.
156.600 The definition of minimum essential coverage.
156.602 Other coverage that qualifies as minimum essential coverage.
156.604 Requirements for recognition as minimum essential coverage for types of coverage not otherwise designated minimum essential coverage in the statute or this subpart.
156.606 HHS audit authority.
Subpart G--Minimum Essential Coverage
   The term minimum essential coverage has the same meaning as provided in section 5000A(f) of the Code and its implementing regulations for purposes of this subpart.
   The following types of coverage are designated by the Secretary as minimum essential coverage for purposes of section 5000A(f)(1)(E) of the Code:
   (a) Self-funded student health coverage. Coverage offered to students by an institution of higher education (as defined in the Higher Education Act of 1965), where the institution assumes the risk for payment of claims, are designated as minimum essential coverage for plan or policy years beginning on or before
   (b) Refugee Medical Assistance supported by the Administration for Children and Families. Coverage under Refugee Medical Assistance, authorized under section 412(e)(7)(A) of The Immigration and Nationality Act, provides up to eight months of coverage to certain noncitizens who are considered Refugees, as defined in section 101(a)(42) of the Act.
   (c)
   (d) State high risk pool coverage. State high risk pools are designated as minimum essential coverage for plan or policy years beginning on or before
   (e) Other coverage. Other coverage that qualifies pursuant to
   (a) The Secretary may recognize "other coverage" as minimum essential coverage provided HHS determines that the coverage meets the following substantive and procedural requirements:
   (1) Coverage requirements. A plan must meet substantially all the requirements of title I of the Affordable Care Act pertaining to non-grandfathered, individual health insurance coverage.
   (2) Procedural requirements. Procedural requirements for recognition as minimum essential coverage. To be considered for recognition as minimum essential coverage, the sponsor of the coverage, or government agency, must submit the following information to HHS:
   (i) Identity of the plan sponsor and appropriate contact persons;
   (ii) Basic information about the plan, including:
   (A) Name of the organization sponsoring the plan;
   (B) Name and title of the individual who is authorized to make, and makes, this certification on behalf of the organization;
   (C) Address of the individual named above;
   (D) Phone number of the individual named above;
   (E) Number of enrollees;
   (F) Eligibility criteria;
   (G) Cost sharing requirements, including deductible and out-of-pocket maximum limit;
   (H) Essential health benefits covered; and
   (I) A certification by the appropriate individual, named pursuant to paragraph (a)(3)(ii)(b), that the organization substantially complies with the requirements of title I of the Affordable Care Act that apply to non-grandfathered plans in the individual market and any plan documentation or other information that demonstrate that the coverage substantially comply with these requirements.
   (b) CMS will publish a list of types of coverage that the Secretary has recognized as minimum essential coverage pursuant to this provision.
   (c) If at any time the Secretary determines that a type of coverage previously recognized as minimum essential coverage no longer meets the coverage requirements of paragraph (a)(1) of this section, the Secretary may revoke the recognition of such coverage.
   (d) Notice. Once recognized as minimum essential coverage, a plan must provide notice to all enrollees of its minimum essential coverage status and must comply with the information reporting requirements of section 6055 of the Code and implementing regulations.
   The Secretary may audit a plan or program recognized as minimum essential coverage under
   Dated:
Administrator,
   Approved:
Secretary,
[FR Doc. 2013-15530 Filed 6-26-13;
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