[Federal Register Volume 62, Number 67 (Tuesday, April 8, 1997)]
[Rules and Regulations]
[Pages 16979-16985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8173]
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules
and Regulations
[[Page 16979]]
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Part 2520
RIN 1210 AA55
Interim Rules Amending ERISA Disclosure Requirements for Group
Health Plans
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Interim rules with request for comments.
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SUMMARY: This document contains interim rules governing the content of
the summary plan description (SPD) for group health plans, the
furnishing of summaries of material reductions in covered services or
benefits by group health plans, and the disclosure of SPD and related
information through electronic media. The rules contained in this
document implement amendments to the disclosure provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) enacted as part
of the Health Insurance Portability and Accountability Act of 1996
(HIPAA) and the Newborns' and Mothers' Health Protection Act of 1996
(NMHPA).
Interested persons are invited to submit comments on the interim
rules for consideration by the Department in developing final rules.
The rules contained in this document are being adopted on an interim
basis to accommodate statutorily established time frames intended to
ensure that sponsors and administrators of group health plans, as well
as participants and beneficiaries covered by such plans, have timely
guidance concerning compliance with the recently enacted amendments to
ERISA.
DATES: Comments. Written comments on these interim rules must be
received by the Department of Labor on or before May 31, 1997.
Effective date. This regulation is effective on June 1, 1997.
However, affected parties do not have to comply with the information
collection requirements in the amendments to 29 CFR 2520.102-3,
2520.104b-1, and 2520.104b-3 made by these interim rules until the
Department publishes in the Federal Register the control numbers
assigned by the Office of Management and Budget (OMB) to these
information collection requirements. Publication of the control numbers
notifies the public that OMB has approved these information collection
requirements under the Paperwork Reduction Act of 1995. The Department
has asked for OMB clearance as soon as possible, and OMB approval is
anticipated by or before June 1, 1997.
Applicability dates. The regulatory amendments implementing
provisions enacted as part of HIPAA generally apply as of the first day
of the first plan year beginning after June 30, 1997. The regulatory
amendments implementing provisions enacted as part of NMHPA generally
apply as of the first day of the first plan year beginning on or after
January 1, 1998.
ADDRESSES: Interested persons are invited to submit written comments
(preferably three copies) on these interim rules to: Pension and
Welfare Benefits Administration, Room N-5669, U.S. Department of Labor,
200 Constitution Avenue, N.W., Washington D.C. 20210. Attention:
Interim Disclosure Rules. All submissions will be open to public
inspection at the Public Documents Room; Pension and Welfare Benefits
Administration; U.S. Department of Labor; Room N-5638; 200 Constitution
Avenue N.W.; Washington, D.C. 20210.
FOR FURTHER INFORMATION CONTACT: Eric A. Raps, Office of Regulations
and Interpretations, Pension and Welfare Benefits Administration, (202)
219-8515 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
A. Background
The rules contained in this document implement amendments to the
disclosure provisions of ERISA enacted as part of HIPAA 1 and
NMHPA. 2 The amendments affect group health plans as defined in
section 733 of ERISA. 3 ERISA section 733(a) defines a ``group
health plan'' as an ``employee welfare benefit plan to the extent that
the plan provides medical care (as defined in paragraph (2) and
including items and services paid for as medical care) to employees or
their dependents (as defined under the terms of the plan) directly or
through insurance, reimbursement or otherwise.'' 4
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\1\ Pub. L. 104-191, enacted on August 21, 1996.
\2\ Pub. L. 104-204, enacted on September 26, 1996.
\3\ Section 733 was enacted as section 706 of ERISA by section
101(a) of HIPAA and subsequently redesignated as section 733 of
ERISA pursuant to section 603(a)(3) of NMHPA.
\4\ ``Medical care'' is defined in paragraph (a)(2) of section
733 to mean ``amounts paid for--(A) the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts paid for the purpose
of affecting any structure or function of the body, (B) amounts paid
for transportation primarily for and essential to medical care
referred to in subparagraph (A), and (C) amounts paid for insurance
covering medical care referred to in subparagraphs (A) and (B).''
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As discussed herein, these rules affect the content of SPDs, the
furnishing of summaries of material reductions in covered services or
benefits to participants, and the disclosure of SPD and related
information through electronic media. As also discussed herein, these
rules are being adopted on an interim basis in order to accommodate
statutorily established time frames for provision of regulatory
guidance. The Department, however, is inviting public comment on the
interim rules to assist in the formulation of final rules in this area.
B. Content of SPDs
Pursuant to ERISA section 101(a)(1), the administrator of an
employee benefit plan is required to furnish an SPD to each participant
covered under the plan and to each beneficiary who is receiving
benefits under the plan. Section 102(b) and the Department's
regulations issued thereunder, 29 CFR 2520.102-3, describe the
information required to be contained in the SPD.
Section 101(c)(2) of HIPAA amended ERISA section 102(b) to require
SPDs of group health plans to include information indicating whether a
health insurance issuer (as defined in section 733(b)(2)) 5 is
responsible for the financing or administration of the plan. This
amendment, in the view of the Department, is intended to ensure that
SPDs clearly inform participants and beneficiaries about the role of
insurance issuers with respect to their group health plan, particularly
in those cases when the plan is self-funded and an insurance issuer is
serving as a contract administrator or claims payor, rather than an
insurer. In such instances, it is important that participants and
beneficiaries understand that the insurance issuer is not acting as
insurer of their health benefits under the plan. In this regard, the
Department is amending paragraph (q) of Sec. 2520.102-3, relating to
the identification of funding media through which benefits are
provided, to add at the end thereof a requirement that, where a health
insurance issuer is responsible, in whole or in part, for the financing
or administration of a group health plan, the SPD of such plan include
the name and address of the issuer, whether and to what extent benefits
under the plan
[[Page 16980]]
are guaranteed under a contract or policy of insurance issued by the
issuer, and the nature of any administrative services (e.g., payment of
claims) provided by the issuer.
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5 ``Health insurance issuer'' is defined in section
733(b)(2) to mean ``an insurance company, insurance service, or
insurance organization (including a health maintenance organization,
as defined in paragraph (3)) which is licensed to engage in the
business of insurance in a State and which is subject to State law
which regulates insurance (within the meaning of section 514(b)(2)).
Such term does not include a group health plan.''
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Section 101(c)(2) of HIPAA also amended ERISA section 102(b) to
require SPDs of group health plans to include the office at the
Department of Labor through which participants and beneficiaries may
seek assistance or information regarding their rights under ERISA and
HIPAA with respect to health benefits. Currently, individualized
participant assistance on all aspects of ERISA is offered through the
Pension and Welfare Benefits Administration's field offices and, in the
national office, the Division of Technical Assistance and Inquiries. To
ensure that participants and beneficiaries are provided assistance
information consistent with HIPAA section 101(c)(2), the Department is
amending the model statement of ERISA rights, at Sec. 2520.102-3(t)(2),
to replace for group health plans the last sentence of that statement
with an updated sentence that reads as follows: ``If you have any
questions about this statement or about your rights under ERISA, you
should contact the nearest office of the Pension and Welfare Benefits
Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries,
Pension and Welfare Benefits Administration, U.S. Department of Labor,
200 Constitution Avenue, N.W., Washington, D.C. 20210.'' Administrators
may include in the statement the address and telephone number of the
nearest office or offices of the Pension and Welfare Benefits
Administration (PWBA). A directory of current PWBA regional and
district offices is printed below.
PWBA Offices
Atlanta Regional Office, 61 Forsyth St., S.W., Suite 7B54, Atlanta,
Georgia 30303, Phone: 404/562-2156
Boston Regional Office, One Bowdoin Square, 7th Floor, Boston, MA
02114, Phone: 617/424-4950
Chicago Regional Office, 200 West Adams Street, Suite 1600, Chicago, IL
60606, Phone: 312/353-0900
Cincinnati Regional Office, 1885 Dixie Highway, Suite 210, Ft. Wright,
KY 41011-2664, Phone: 606/578-4680
Dallas Regional Office, 525 Griffin Street, Rm. 707, Dallas, Texas
75202-5025, Phone: 214/767-6831
Detroit District Office, 211 West Fort Street, Suite 1310, Detroit, MI
48226-3211, Phone: 313/226-7450
Kansas City Regional Office, City Center Square, 1100 Main, Suite 1200,
Kansas City, MO 64105-2112, Phone: 816/426-5131
Los Angeles Regional Office, 790 E. Colorado Boulevard, Suite 514,
Pasadena, CA 91101, Phone: 818/583-7862
Miami District Office, 111 NW 183rd St., Suite 504, Miami, Florida
33169, Phone: 305/651-6464
New York Regional Office, 1633 Broadway, Rm. 226, New York, N.Y. 10019,
Phone: 212/399-5191
Philadelphia Regional Office, Gateway Bldg., 3535 Market Street, Room
M300, Philadelphia, PA 19104, Phone: 215/596-1134
St. Louis District Office, 815 Olive Street, Rm. 338, St. Louis, MO
63101-1559, Phone: 314/539-2691
San Francisco Regional Office, 71 Stevenson St., Suite 915, P.O. Box
190250, San Francisco, CA 94119-0250, Phone: 415/975-4600
Seattle District Office, 1111 Third Avenue, Suite 860, MIDCOM Tower,
Seattle, Washington 98101-3212, Phone: 206/553-4244
Washington D.C. District Office, 1730 K Street, N.W., Suite 556,
Washington, D.C. 20006, Phone: 202/254-7013
The Department notes that, in the case of group health plans not
utilizing the model statement in Sec. 2520.102-3(t)(2), the foregoing
information is required to be included in a statement of ERISA rights
intended to satisfy the requirements of paragraph (t)(1) of that
section.
Pursuant to HIPAA section 101(g), the foregoing amendments to the
SPD content requirements apply with respect to group health plans for
plan years beginning after June 30, 1997. The Department is amending
Sec. 2520.102-3 to add a new paragraph (v), ``applicability dates'',
that treats the HIPAA content changes as changes in the information
required to be contained in the SPD and applies the requirements of 29
CFR 2520.104b-3 6 to the disclosure of such changes, except that
the changes have to be disclosed to participants and beneficiaries not
later than 60 days after the first day of the first plan year for which
the changes are applicable to the plan.
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\6\ Section 2520.104b-3 prescribes the requirements applicable
to the furnishing of summaries of material modifications to the plan
and changes in the information required to be included in the
summary plan description.
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While the interim rule amendment of the model statement of ERISA
rights corrects outdated name and address information for contacting
the U.S. Department of Labor, and therefore has obvious applicability
beyond group health plans, the Department is limiting the interim rule
to group health plans in view of directive under HIPAA section
101(c)(2). The Department, however, specifically invites public comment
on the extent to which application of the rule should be extended to
other plans.
Section 603(a) of the NMHPA also amended ERISA by adding a new
section 711 establishing restrictions on the extent to which group
health plans and health insurance issuers may limit hospital lengths of
stay for mothers and newborn children following delivery. In an effort
to ensure that participants and beneficiaries are apprised of the
limitations established under NMHPA, paragraph (d) of section 711
provides that ``[t]he imposition of the requirements of this section
[section 711] shall be treated as a material modification in the terms
of the plan * * * except that the summary description required to be
provided under the last sentence of section 104(b)(1) with respect to
such modification shall be provided by not later than 60 days after the
first day of the first plan year in which such requirements apply.''
7 Pursuant to NMHPA section 603(c), the provisions of section 603
apply to group health plans for plan years beginning on or after
January 1, 1998. In this regard, the Department is amending
Sec. 2520.102-3, the SPD content regulations, by adding a new paragraph
(u) requiring that the SPDs of group health plans offering maternity
benefits include a statement indicating that ``group health plans and
health insurance issuers offering group health insurance coverage
generally may not, under Federal law, restrict benefits for any
hospital length of stay in connection with childbirth for the mother or
newborn child to less than 48 hours following a normal vaginal
delivery, or less than 96 hours following a caesarean section, or
require that a provider obtain authorization from the plan or insurance
issuer for prescribing a length of stay not in excess of the above
periods.'' To facilitate compliance, the Department views the statement
included in this new paragraph (u) of the regulation as sample language
that may be used by administrators to satisfy this content requirement
for group health plan SPDs.
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\7\ Section 104(b)(1) generally requires summary descriptions of
material modifications to the plan to be furnished to participants
and beneficiaries not later than 210 days after the end of the plan
year in which the change is adopted.
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Consistent with NMHPA section 603(c), new paragraph (v) of
Sec. 2520.102-3, relating to applicability dates, provides that the
information described in paragraph (u) of Sec. 2520.102-3 shall be
furnished to each participant covered
[[Page 16981]]
under the plan and each beneficiary receiving benefits under the plan
not later than 60 days after the first day of the first plan year
beginning on or after January 1, 1998.
C. Material Reductions In Covered Services or Benefits
Section 104(b)(1) of ERISA requires, among other things, that
participants and beneficiaries be furnished summary descriptions of
material modifications in the terms of their plans and changes in the
information required to be included in the SPD not later than 210 days
after the end of the plan year in which the change is adopted. Section
101(c)(1) of HIPAA amended ERISA section 104(b)(1) to provide that in
the case of any modification or change that is a ``material reduction
in covered services or benefits provided under a group health plan'',
participants and beneficiaries must be furnished the summary of such
modification or change not later than 60 days after the adoption of the
modification or change, unless plan sponsors provide summaries of
modifications or changes at regular intervals of not more than 90 days.
The interim rules contained herein amend the regulations governing
the furnishing of summaries of material modifications, at 29 CFR
2520.104b-3, to establish a special rule for the furnishing of
summaries of material modifications and changes by group health plans
when such modifications or changes constitute a material reduction in
covered services or benefits under the plan. The rules governing the
furnishing of such summaries are contained in a new paragraph (d) of
Sec. 2520.104b-3.
Section 2520.104b-3(d)(1) provides, consistent with HIPAA section
101(c)(1), that the administrator of a group health plan must furnish
to each participant covered under the plan and each beneficiary
receiving benefits under the plan, a summary of any modification to the
plan or change in the information required to be included in the SPD
that is a material reduction in covered services or benefits not later
than 60 days after the date of adoption of the modification or change.
Section 2520.104b-3(d)(2) provides that the 60-day period for
furnishing summaries of modifications or changes, described in
paragraph (d)(1), does not apply to any participant covered by the plan
or any beneficiary receiving benefits who would reasonably be expected
to be furnished such summary in connection with a system of
communication maintained by the plan sponsor or administrator, with
respect to which plan participants and beneficiaries are provided
information concerning their plan, including modifications and changes
thereto, at regular intervals of not more than 90 days. For example, a
summary of material reduction in services or benefits would not have to
be furnished to participants within the prescribed 60-day period if
such summary is included as an insert in a union newspaper or a company
publication regularly furnished to participants at intervals of not
more than 90 days. It should be noted that the use of such periodicals
must otherwise meet the requirements of 29 CFR 2520.104b-1.8 It
should also be noted that if a plan has participants or beneficiaries
(e.g., separated participants, qualified beneficiaries with
continuation coverage, etc.) that do not receive the newspaper, company
publication or periodic disclosure, such participants and beneficiaries
must be furnished the summaries of material reductions in services or
benefits under the group health plan not later than 60 days after the
date of adoption.
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\8\ Section 2520.104b-1 permits the disclosure of plan
information through periodicals, such as union newspapers and
company publications, if the distribution list for the periodical is
comprehensive and up-to-date and a prominent notice on the front
page of the periodical advises the reader that the issue contains an
insert with important information about the plan which should be
read and retained for future reference.
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Section 2520.104b-3(d)(3) defines the term ``material reduction in
covered services or benefits'' provided under a group health plan. For
purposes of furnishing summaries of material modifications or changes,
paragraph (d)(3)(i) defines a ``material reduction in covered services
or benefits'' to mean any modification to the plan or change in the
information required to be included in the SPD that, independently or
in conjunction with other contemporaneous modifications or changes,
would be considered by the average plan participant to be an important
reduction in covered services or benefits.
While it is the view of the Department that determinations as to
whether a particular plan modification or SPD change constitutes a
``material reduction in covered services or benefits'' generally will
depend on the facts of each case, the Department believes that in
making such determinations it is appropriate, given the nature of the
required disclosure, to assess in each case whether the average
participant in the plan would view the modification or change as an
important reduction in covered services or benefits under the plan.
Also, recognizing that the significance of plan modifications or
changes may be affected by other contemporaneous modifications or
changes, it is the view of the Department that plan modifications and
SPD changes must be viewed in the aggregate for purposes of determining
whether such modifications or changes, individually or together, result
in a ``material reduction in covered services or benefits.''
To facilitate compliance, paragraph (d)(3)(ii) sets forth a listing
of modifications or changes that generally would constitute a
``reduction in covered services or benefits.'' In this regard,
paragraph (d)(3)(ii) provides that a ``reduction in covered services or
benefits'' generally would include any modification or change that:
eliminates benefits payable under the plan; reduces benefits payable
under the plan, including a reduction that occurs as a result of a
change in formulas, methodologies or schedules that serve as the basis
for making benefit determinations; increases deductibles, co-payments,
or other amounts to be paid by a participant or beneficiary; reduces
the service area covered by a health maintenance organization;
establishes new conditions or requirements (e.g., preauthorization
requirements) to obtaining services or benefits under the plan.
The interim rules add a new paragraph (e) to Sec. 2520.104b-3
setting forth the dates on which the requirements of Sec. 2520.104b-
3(d) take effect. Under Sec. 2520.104b-3(e), the requirements of
paragraph (d) apply to material reductions in covered services or
benefits under a group health plan adopted on or after the first day of
the first plan year beginning after June 30, 1997.
D. Alternative Delivery Mechanisms--Disclosure Through Electronic
Media
In addition to amending ERISA section 104(b)(1) to provide for the
furnishing of summaries of material reductions in covered services or
benefits, section 101(c) of HIPAA amended section 104(b)(1) to provide
that ``[t]he Secretary shall issue regulations within 180 days after
the date of enactment of the Health Insurance Portability and
Accountability Act of 1996, providing alternative mechanisms to
delivery by mail through which group health plans (as so defined) may
notify participants and beneficiaries of material reductions in covered
services or benefits.''
The Department has issued a regulation, at 29 CFR 2520.104b-1,
governing the delivery of information required to be furnished to
participants
[[Page 16982]]
and beneficiaries under ERISA. The Department notes that the regulation
does not require delivery by mail where other methods of delivery are
reasonably calculated to ensure actual receipt of materials by
participants and beneficiaries and likely to result in full
distribution of the information. See Sec. 2520.104b-1(b). In this
regard, paragraph (b) of Sec. 2520.104b-1 cites, as an example, in-hand
delivery of materials to employees at their worksite locations. The
regulation also references the use of union newsletters and company
publications as a means by which an administrator may satisfy its
disclosure obligation. An alternative to mail delivery not specifically
referenced in the current regulation is delivery of disclosure
materials through electronic media. Accordingly, the Department is
amending Sec. 2520.104b-1 to clarify the circumstances under which a
group health plan administrator will be deemed to satisfy its
disclosure obligation under Sec. 2520.104b-1 with respect to the
delivery of SPDs, summaries of material reductions in covered services
or benefits and other summaries of plan modifications and SPD changes
through electronic media.9 This amendment is intended to
establish, on an interim basis, a ``safe harbor'' on which
administrators of group health plans may rely in delivering plan
disclosures through electronic media. The amendment is not intended to
represent the exclusive means by which the requirements of
Sec. 2520.104b-1 may be satisfied in using electronic media as a method
of delivering plan disclosures.
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\9\ In the Department's view, a method of delivery, and
conditions applicable thereto, appropriate for furnishing summaries
of material reductions in covered services or benefits is
necessarily appropriate to the furnishing by group health plans of
other types of material modifications, SPDs and updated SPDs, given
the similar, if not identical, nature of the information being
provided.
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Under the interim rule, Sec. 2520.104b-1 is amended by adding a new
paragraph (c) setting forth the conditions under which the use by a
group health plan of electronic media for furnishing documents
described in ERISA section 104(b)(1), i.e., SPDs and summaries of
material modifications and changes, will be deemed to be a method of
delivery that is calculated to ensure actual receipt and result in full
distribution, within the meaning of paragraph of Sec. 2520.104b-1. New
paragraph (c)(1) of Sec. 2520.104b-1 sets forth criteria that are
generally intended to ensure that the system of electronic
communication utilized by a plan administrator for distribution of
disclosure information results in the actual delivery of such
information to participants and that the information delivered is
equivalent in both substance and form to the disclosure information the
participants would have received had they been furnished the
information in paper form. In general, paragraph (c)(1) (i)-(ii)
provides for the utilization of an electronic delivery system that: (i)
the administrator takes appropriate and necessary steps to ensure
results in actual receipt by participants of transmitted information,
such as through the use of a return-receipt electronic mail feature or
periodic reviews or surveys by the plan administrator to confirm the
integrity of the delivery system; and (ii) results in the furnishing of
disclosure information that is consistent with the style, format and
content requirements applicable to the disclosure (See 29 CFR 2520.102-
2 et seq.). New paragraph (c)(1)(iii) requires notification to each
participant, through electronic or other means, apprising the
participant of the disclosure documents furnished electronically (e.g.,
SPDs, summaries of material changes to the plan and changes to
information included in the SPD), the significance of the documents
(e.g., the document contains summary descriptions of changes in the
benefits described in your SPD), and the participant's right to request
and receive, free of charge, a paper copy of each such document from
the plan administrator. The Department believes such notification is
necessary so that participants who, for example, receive a disclosure
document as an attachment to an electronically transmitted message will
be put on notice that the attachment contains important plan
information.
It is the view of the Department that participants have a general
right to receive required plan disclosures in paper form from the plan
administrator. Accordingly, the Department believes that where a plan
administrator elects to utilize electronic media as the method for
delivering required plan disclosures, participants must be afforded the
opportunity to obtain the disclosures from the plan administrator in
paper form, free of charge. The obligation to furnish paper copies of
documents furnished through electronic media is set forth in paragraph
(c)(1)(iv). The Department specifically invites public comment on the
relative costs and benefits of this requirement to furnish paper copies
to participants on request of documents furnished through electronic
media.
New paragraph (c)(2) describes the participants with respect to
whom the electronic delivery of plan disclosures will be deemed to be
an acceptable method of delivery for fulfilling the disclosure
obligation described in Sec. 2520.104b-1(b)(1). Such participants, in
the view of the Department, must have: the ability to effectively
access at their worksite documents furnished in electronic form; and
the opportunity at their worksite to readily convert furnished
documents from electronic form to paper form, free of charge. In this
regard, the Department believes that, however effective an electronic
system may be for delivering plan disclosures, the critical
determination in assessing the adequacy of the system, as a means for
communicating to plan participants, will be the extent to which
participants can readily access and retain the delivered information.
While the Department believes the criteria set forth in the interim
rule have applicability beyond group health plans, the Department is
limiting the interim rule ``safe harbor'' to group health plans in view
of directive under HIPAA section 101(c)(1) and the absence of a public
record on the matter. The Department, however, specifically invites
public comment on the criteria established by the interim rule, the
extent to which application of the rule should be extended to other
plans, the extent to which application of the rule should be expanded
to other plan disclosures (e.g., summary annual reports, individual
benefit statements) and, if expanded, whether additional criteria may
be necessary to ensure private, confidential communications of
individual account or benefit-related information.
Administrators of group health plans may rely on this interim
amendment on or after June 1, 1997.
E. Interim Rules and Request for Comments
The rules contained herein are being adopted on an interim basis in
order to ensure that plan sponsors and administrators of group health
plans, as well as participants and beneficiaries, are provided timely
guidance concerning compliance with recently enacted amendments to
ERISA. Specifically, HIPAA section 101(a) adds a new ERISA part 7, and
within this new part, section 707 (redesignated as section 734 by
section 603(a)(3) of the NMHPA) provides that the Secretary of Labor
may promulgate any interim final rules as the Secretary determines are
appropriate to carry out this part. The rules herein complement changes
made in the new part 7 of ERISA and are being adopted on an interim
basis because the Department finds that issuance of such regulations in
interim
[[Page 16983]]
final form with a request for comments is appropriate to carry out the
new regulatory structure imposed by HIPAA on group health plans and
health insurance issuers, and is necessary to ensure that plan sponsors
and administrators of group health plans, as well as participants and
beneficiaries, are provided timely guidance concerning compliance with
new and important disclosure obligations imposed by HIPAA. The
Department also finds for the above reasons that the publication of a
proposed regulation would be impracticable, unnecessary, and contrary
to the public interest.
The statutory provisions of HIPAA and NMHPA implemented by the
pertinent regulatory amendments in this document are generally
applicable for group health plans for plan years beginning on or after
July 1, 1997, and January 1, 1998, respectively. Plan administrators
and sponsors, and participants and beneficiaries, will need guidance on
how to comply with the new statutory provisions before these effective
dates. Pursuant to section 101(g) of HIPAA, the Secretary must first
issue regulations necessary to carry out the amendments made by section
101 by April 1, 1997. Issuance of a notice of proposed rulemaking with
a period for comments prior to issuing a final rule could delay the
issuance of essential guidance and prevent the Department from
complying with its deadline. Furthermore, although the rules herein are
being adopted on an interim basis, the Department is inviting
interested persons to submit written comments on the rules for
consideration in the development of final rules in this area. Such
final rules may be issued in advance of the above July 1, 1997, and
January 1, 1998, dates.
Executive Order 12866 Statement
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), it must be
determined whether a departmental action is ``significant'' and
therefore subject to review by the Office of Management and Budget
(OMB) and the requirements of the Executive Order. Under section 3(f),
the order defines a ``significant regulatory action'' as an action that
is likely to result in a rule (1) having an annual effect on the
economy of $100 million or more, or adversely and materially affecting
a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local or tribal
governments or communities (also referred to as ``economically
significant''); (2) creating a serious inconsistency or otherwise
interfering with an action taken or planned by another agency; (3)
materially altering the budgetary impacts of entitlement, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy issues arising out of
legal mandates, the President's priorities, or the principles set forth
in the Executive Order.
Pursuant to the terms of the Executive Order, it has been
determined that the action that is the subject of the interim rules is
``significant'' under category (4), supra, and subject to OMB review on
that basis. The estimated cost of compliance with HIPAA and the interim
rules are set forth in the Paperwork Reduction Act Analysis, below. The
benefits of the interim rules, as yet unquantified, will arise as
participants and beneficiaries become better informed about their
health care coverage because of additional disclosures and more timely
distribution of plan information.
Paperwork Reduction Act Analysis
The Department of Labor has submitted this emergency processing
public information collection request (ICR) to the Office of Management
and Budget for review and clearance under the Paperwork Reduction Act
of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). The Department has
asked for OMB clearance as soon as possible, and OMB approval is
anticipated by or before June 1, 1997. As part of its continuing effort
to reduce paperwork and respondent burden, the Department conducts a
pre-clearance consultation program to provide the general public and
Federal agencies with an opportunity to comment on ICRs in accordance
with the Paperwork Reduction Act of 1995 (PRA 95)(Pub. L. 104-13, 44
U.S.C. Chapter 35) and 5 CFR 1320.11. This program helps to ensure that
requested data can be provided in the desired format, reporting burden
(time and financial resources) is minimized, collection instruments are
clearly understood, and the impact of collection requirements on
respondents can be properly assessed. Currently, the Pension and
Welfare Benefits Administration is soliciting comments concerning the
revised collection of Summary Plan Description Requirements under
ERISA.
Dates: Written comments must be submitted to the offices listed in the
addressee section below on or before May 31, 1997. In light of the
request for OMB clearance by June 1, 1997, submission of comments
within the first 30 days is encouraged to ensure their consideration.
The Department and the Office of Management and Budget are
particularly interested in comments which:
evaluate whether the proposed collection is necessary for
the proper performance of the functions of the agency, including
whether the information will have practical utility;
evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
enhance the quality, utility, and clarify the information
to be collected; and
minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submissions of responses.
ADDRESSES: Comments and questions about the ICR should be forwarded to:
Gerald B. Lindrew, Office of Policy and Research, U.S. Department of
Labor, Pension and Welfare Benefits Administration, 200 Constitution
Avenue, Room N-5647, Washington, D.C. 20210, Telephone: (202) 219-4782
(this is not a toll-free number), Fax: (202) 219-4745; and the Office
of Information and Regulatory Affairs, Attn: OMB Desk Officer for the
Pension and Welfare Benefits Administration, Office of Management and
Budget, Room 10235, Washington, D.C. 20503, Telephone: (202) 395-7316.
Additional PRA 95 Information:
I. Background: The administrator of an employee benefit plan is
required to furnish an SPD to each participant covered under the plan
and to each beneficiary who is receiving benefits under the plan. The
SPD must be written in a manner calculated to be understood by the
average plan participant and must be sufficiently comprehensive to
apprise the plan's participants and beneficiaries of their rights and
obligations under the plan. To the extent that there is a material
modification in the terms of the plan or a change in the information
required to be contained in the SPD, ERISA requires that the
administrator furnish participants covered under the plan and
beneficiaries receiving benefits with a summary of such changes.
II. Current Actions: HIPAA and NMHPA amend certain reporting and
disclosure provisions of ERISA
Type of Review: Revision of currently approved collection.
[[Page 16984]]
Agency: Pension and Welfare Benefits Administration.
Title: The title of the interim rule is Amendment of Summary Plan
Description and Related ERISA Regulations To Implement Statutory
Changes In the Health Insurance Portability and Accountability Act of
1996 (HIPAA).
OMB Number: 1210-0039.
Affected Public: Business or other for-profit, not-for-profit.
Total Responses (annual): 43,952,715 (1997), 62,728,915 (1998),
31,896,715 (1999).
Total Respondents (annual): 176,315 (1997), 194,235 (1998), 163,515
(1999).
Frequency: On occasion.
Average Time per Response:
Average SPD/SMM--We estimate it takes an average of 6 hours for
preparation of SPDs/SMMs, including the time to copy, assemble, and
mail the document to the Department of Labor.
SMM Compliance--We estimate that preparation of an SMM sufficient
to satisfy the requirements of this regulation will take an average of
1 hour.
Distribution--We estimate that 2 minutes per participant is the
time needed to distribute an SMM/SPD, including time spent reproducing
the document and mailing the document.
Estimated Total Burden Hours: 1,007,425 (1997), 1,130,282 (1998),
942,980 (1999).
There is estimated to be no capital/start-up cost. Total Burden
Cost for operating/maintenance is estimated to be $72,310,858 in 1997,
$82,338,958 in 1998 and $65,002,858 in 1999.
Note: The Average Time Per Response, Estimated Total Burden
Hours, and Total Burden Cost have been estimated without accounting
for those respondents that will implement the ``alternative
mechanisms to delivery by mail'' provision contained in the interim
rule. It is expected that some respondents will use these
alternatives, and that these alternatives will reduce burden hours
and costs.
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval of the information
collection request; they will also become a matter of public record.
Congressional Review
This interim rule has been transmitted to Congress and the
Comptroller General for review under section 801(a)(1)(A) of the Small
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et
seq.).
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, this interim rule does not
include any Federal mandate that may result in expenditures by State,
local or tribal governments, and does not impose an annual burden
exceeding $100 million on the private sector.
Statutory Authority
This interim regulation is adopted pursuant to authority contained
in section 505 of ERISA (Pub. L. 93-406, 88 Stat. 894, 29 U.S.C. 1135)
and sections 104(b) and 734 of ERISA, as amended, (Pub. L. 104-191, 110
Stat. 1936, 1951 and Pub. L. 104-204, 110 Stat. 2935, 29 U.S.C. 1024
and 1191c) and under Secretary of Labor's Order No. 1-87, 52 FR 13139,
April 21, 1987.
List of Subjects in 29 CFR Part 2520
Employee benefit plans, Employee Retirement Income Security Act,
Group health plans, Pension plans, Welfare benefit plans.
For the reasons set forth above, Part 2520 of Title 29 of the Code
of Federal Regulations is amended as follows:
PART 2520--[AMENDED]
1. The authority for Part 2520 is revised to read as follows:
Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111(b)(2),
111(c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.
1021-1025, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,
13-76, 1-87, and Labor Management Services Administration Order 2-6.
Sections 2520.102-3, 2520.104b-1 and 2520.104b-3 also are issued
under sec. 101 (a), (c) and (g)(4) of Pub. L. 104-191, 110 Stat. 1936,
1939, 1951 and 1955 and, sec. 603 of Pub. L. 104-204, 110 Stat. 2935
(29 U.S.C. 1185 and 1191c).
2. Section 2520.102-3 is amended by adding a sentence at the end of
paragraph (q) to read as follows:
Sec. 2520.102-3 Contents of summary plan description.
* * * * *
(q) * * * If a health insurance issuer, within the meaning of
section 733(b)(2) of the Act, is responsible, in whole or in part, for
the financing or administration of a group health plan, the summary
plan description shall indicate the name and address of the issuer,
whether and to what extent benefits under the plan are guaranteed under
a contract or policy of insurance issued by the issuer, and the nature
of any administrative services (e.g., payment of claims) provided by
the issuer.
* * * * *
3. Section 2520.102-3 is further amended by revising the last
sentence of the undesignated paragraph following paragraph (t)(2) to
read as follows:
Sec. 2520.102-3 Contents of summary plan description.
* * * * *
(t) * * *
(2) * * *
If you have any questions about this statement or about your rights
under ERISA, you should contact the nearest office of the Pension and
Welfare Benefits Administration, U.S. Department of Labor, listed in
your telephone directory or the Division of Technical Assistance and
Inquiries, Pension and Welfare Benefit Administration, U.S. Department
of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
4. Section 2520.102-3 is further amended by adding paragraphs (u)
and (v) to read as follows:
Sec. 2520.102-3 Contents of summary plan description.
* * * * *
(u) In the case of a group health plan, as defined in section
733(a)(1) of the Act, that provides maternity or newborn infant
coverage, a statement indicating that group health plans and health
insurance issuers offering group insurance coverage generally may not,
under Federal law, restrict benefits for any hospital length of stay in
connection with childbirth for the mother or newborn child to less than
48 hours following a normal vaginal delivery, or less than 96 hours
following a caesarean section, or require that a provider obtain
authorization from the plan or the insurance issuer for prescribing a
length of stay not in excess of the above periods.
(v) Applicability dates. (1) The information described in the last
sentence of paragraph (q) and in the last two sentences of paragraph
(t)(2) shall be treated as a change in the information required to be
included in the summary plan description for a group health plan for
purposes of 29 CFR 2520.104b-3, except that such information shall be
furnished to each participant covered under the plan and each
beneficiary receiving benefits under the plan not later than 60 days
after the first day of the first plan year beginning after June 30,
1997.
(2) The information described in paragraph (u) of this section
shall be furnished to each participant covered under a group health
plan and each beneficiary receiving benefits under a group health plan
not later than 60 days after the first day of the first plan year
beginning on or after January 1, 1998.
[[Page 16985]]
5. Section 2520.104b-3 is amended by revising the second sentence
of paragraph (a), redesignating paragraphs (d) and (e) as paragraphs
(f) and (g), respectively, and adding new paragraphs (d) and (e) to
read as follows:
Sec. 2520.104b-3 Summary of material modifications to the plan and
changes in the information required to be included in the summary plan
description.
(a) * * * Except as provided in paragraph (d) of this section, the
plan administrator shall furnish this summary, written in a manner
calculated to be understood by the average plan participant, not later
than 210 days after the close of the plan year in which the
modification or change was adopted. * * *
* * * * *
(d) Special rule for group health plans. (1) General. Except as
provided in paragraph (d)(2) of this section, the administrator of a
group health plan, as defined in section 733(a)(1) of the Act, shall
furnish to each participant covered under the plan and each beneficiary
receiving benefits under the plan a summary, written in a manner
calculated to be understood by the average plan participant, of any
modification to the plan or change in the information required to be
included in the summary plan description, within the meaning of
paragraph (a) of this section, that is a material reduction in covered
services or benefits not later than 60 days after the date of adoption
of the modification or change.
(2) 90-day alternative rule. The administrator of a group health
plan shall not be required to furnish a summary of any material
reduction in covered services or benefits within the 60-day period
described in paragraph (d)(1) of this section to any participant
covered under the plan or any beneficiary receiving benefits who would
reasonably be expected to be furnished such summary in connection with
a system of communication maintained by the plan sponsor or
administrator, with respect to which plan participants and
beneficiaries are provided information concerning their plan, including
modifications and changes thereto, at regular intervals of not more
than 90 days and such communication otherwise meets the disclosure
requirements of 29 CFR 2520.104b-1.
(3) ``Material reduction''. (i) For purposes of this paragraph (d),
a ``material reduction in covered services or benefits'' means any
modification to the plan or change in the information required to be
included in the summary plan description that, independently or in
conjunction with other contemporaneous modifications or changes, would
be considered by the average plan participant to be an important
reduction in covered services or benefits under the plan.
(ii) A ``reduction in covered services or benefits'' generally
would include any plan modification or change that: eliminates benefits
payable under the plan; reduces benefits payable under the plan,
including a reduction that occurs as a result of a change in formulas,
methodologies or schedules that serve as the basis for making benefit
determinations; increases deductibles, co-payments, or other amounts to
be paid by a participant or beneficiary; reduces the service area
covered by a health maintenance organization; establishes new
conditions or requirements (e.g., preauthorization requirements) to
obtaining services or benefits under the plan.
(e) Applicability date. Paragraph (d) of this section is applicable
as of the first day of the first plan year beginning after June 30,
1997.
* * * * *
6. Section 2520.104b-1 is amended by redesignating paragraph (c) as
paragraph (d) and adding a new paragraph (c) to read as follows:
Sec. 2520.104b-1 Disclosure.
* * * * *
(c) Disclosure through electronic media. (1) The administrator of a
group health plan furnishing documents described in section 104(b)(1)
of the Act through electronic media will be deemed to satisfy the
requirements of paragraph (b)(1) of this section with respect to
participants described in paragraph (c)(2) of this section if:
(i) The administrator takes appropriate and necessary measures to
ensure that the system for furnishing documents results in actual
receipt by participants of transmitted information and documents (e.g.,
uses return-receipt electronic mail feature or conducts periodic
reviews or surveys to confirm receipt of transmitted information);
(ii) Electronically delivered documents are prepared and furnished
in a manner consistent with the applicable style, format and content
requirements (See 29 CFR 2520.102-2 through 2520.102-5);
(iii) Each participant is provided notice, through electronic means
or in writing, apprising the participant of the document(s) to be
furnished electronically, the significance of the document (e.g., the
document describes changes in the benefits provided by your plan) and
the participant's right to request and receive, free of charge, a paper
copy of each such document; and
(iv) Upon request of any participant, the administrator furnishes,
free of charge, a paper copy of any document delivered to the
participant through electronic media.
(2) For purposes of paragraph (c)(1) of this section, the
furnishing of documents through electronic media satisfies the
requirements of paragraph (b)(1) of this section only with respect to
participants:
(i) Who have the ability to effectively access at their worksite
documents furnished in electronic form; and
(ii) Who have the opportunity at their worksite location to readily
convert furnished documents from electronic form to paper form free of
charge.
(3) This paragraph (c) applies on or after June 1, 1997.
* * * * *
Signed at Washington, D.C., this 27th day of March, 1997.
Olena Berg,
Assistant Secretary, Pension and Welfare Benefits Administration, U.S.
Department of Labor.
[FR Doc. 97-8173 Filed 4-1-97; 12:52 pm]
BILLING CODE 4510-29-P
