[Federal Register Volume 79, Number 88 (Wednesday, May 7, 2014)]
[Proposed Rules]
[Pages 26192-26195]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10416]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB65
Health Care Continuation Coverage
AGENCIES: Employee Benefits Security Administration, Department of
Labor.
ACTION: Proposed rules.
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SUMMARY: These proposed regulations contain amendments to notice
requirements of the health care continuation coverage (COBRA)
provisions of Part 6 of title I of the Employee Retirement Income
Security Act of 1974 (ERISA) to better align the provision of guidance
under the COBRA notice requirements with the Affordable Care Act
provisions already in effect, as well as any provisions of federal law
that will become applicable in the future.
DATES: Written comments on this notice of proposed rulemaking are
invited and must be received by July 7, 2014.
ADDRESSES: Written comments may be submitted to the Department of Labor
as specified below. Any comment that is submitted will be shared with
the other Departments and will also be made available to the public.
Warning: Do not include any personally identifiable information (such
as name, address, or other contact information) or confidential
business information that you do not want publicly disclosed. All
comments may be posted on the Internet and can be retrieved by most
Internet search engines. No deletions, modifications, or redactions
will be made to the comments received, as they are public records.
Comments may be submitted anonymously.
Comments, identified by ``Health Care Continuation Coverage,'' may
be submitted by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
Mail or Hand Delivery: Office of Health Plan Standards and
Compliance Assistance, Employee Benefits Security Administration, Room
N-5653, U.S. Department of Labor, 200 Constitution Avenue NW.,
Washington, DC 20210, Attention: Health Care Continuation Coverage.
Comments received will be posted without change to
www.regulations.gov and available for public inspection at the Public
Disclosure Room, N-1513, Employee Benefits Security Administration, 200
Constitution Avenue NW., Washington, DC 20210, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT: Amy Turner or Elizabeth Schumacher,
Employee Benefits Security Administration, Department of Labor.
Customer service information: Individuals interested in obtaining
information from the Department of Labor concerning employment-based
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (www.dol.gov/ebsa).
SUPPLEMENTARY INFORMATION:
I. Background
The continuation coverage provisions, sections 601 through 608 of
title I of the Employee Retirement Income Security Act (ERISA), were
enacted as part of the Consolidated Omnibus Budget Reconciliation Act
of 1985 (COBRA), which also promulgated parallel provisions of the
Internal Revenue Code (the Code) and the Public Health Service Act (the
PHS Act).\1\ These provisions are commonly referred to as the COBRA
provisions, and the continuation coverage that they mandate is commonly
referred to as COBRA coverage. COBRA, as enacted, provides that the
Secretary of Labor (the Secretary) has the authority under section 608
to carry out the provisions of part 6 of title I of ERISA. The
Conference Report that accompanied COBRA divided interpretive authority
over the COBRA provisions between the Secretary and the Secretary of
the Treasury (the Treasury) by providing that the Secretary has the
authority to issue regulations implementing the notice and disclosure
requirements of COBRA, while the Treasury is authorized to issue
regulations defining the required continuation coverage.\2\
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\1\ The Code and PHS Act COBRA provisions, although very similar
in other ways, are not identical to the COBRA provisions in title I
of ERISA in their scope of application. The PHS Act provisions apply
only to State and local governmental plans, and the Code provisions
grant COBRA rights to individuals who would not be considered
participants or beneficiaries under ERISA. See PHS Act, 42 U.S.C.
300bb-8; Code section 5000(b)(1).
\2\ H.R. Conf. Rep. No. 99-453, 99th Cong., 1st Sess., at 562-63
(1985). The Conference Report further indicates that the Secretary
of Health and Human Services, who is to issue regulations
implementing the continuation coverage requirements for State and
local governments, must conform the actual requirements of those
regulations to the regulations issued by the Secretary and the
Treasury. Id. at 563.
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On May 26, 2004, the Department of Labor (Department) issued final
regulations implementing various provisions of the COBRA notice
requirements and model notices to facilitate compliance with the
requirement to provide the general notice of continuation coverage
(general notice) as well as COBRA continuation election notice
(election notice).\3\ The model general notice was issued in an
appendix to Sec. 2590.606-1 and the model election notice was issued
in an appendix to Sec. 2590.606-4.
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\3\ 69 FR 30084 (May, 26, 2004).
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In general, under COBRA, group health plans must provide a written
notice of COBRA rights to each covered employee and spouse (if any)
``at the time of commencement of coverage'' under the plan. Generally,
the notice must be furnished to each covered employee and to the
employee's spouse (if covered under the plan) not later than the
earlier of: (1) Either 90 days from the date on which the covered
employee or spouse first becomes covered under the plan or, if later,
the date on which the plan first becomes subject to the continuation
coverage requirements; or (2) the date on which
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the administrator is required to furnish an election notice to the
employee or to his or her spouse or dependent.\4\
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\4\ See 29 CFR 2590.606-1.
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In addition to the general notice, group health plans must provide
an election notice at the time of certain qualifying events.\5\ In
general, an individual who was covered by a group health plan on the
day before a qualifying event occurred may be able to elect COBRA
continuation coverage upon a qualifying event (such as termination of
employment or reduction in hours that causes loss of coverage under the
plan).\6\ Individuals with such a right are called qualified
beneficiaries. A group health plan must provide qualified beneficiaries
with an election notice, which describes their rights to continuation
coverage and how to make an election. The election notice must be
provided to the qualified beneficiaries within 14 days after the plan
administrator receives the notice of a qualifying event.
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\5\ See 29 CFR 2590.606-4.
\6\ For more information on COBRA continuation coverage
requirements applicable to group health plans, see ``An Employer's
Guide to Group Health Continuation Coverage Under COBRA,'' available
at www.dol.gov/ebsa/publications/cobraemployer.html.
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On May 8, 2013, the Department issued Technical Release 2013-02 and
an updated model election notice with additional information regarding
health coverage options that will be available beginning January 1,
2014 under the Patient Protection and Affordable Care Act (Affordable
Care Act).\7\ The guidance highlighted that some qualified
beneficiaries may want to consider and compare health coverage
alternatives to COBRA continuation coverage that are available through
a new competitive private health insurance market--the Health Insurance
Marketplace (Marketplace). The Department also noted that some
qualified beneficiaries may also be eligible for a premium tax credit
(a tax credit to help pay for some or all of the cost of coverage in
plans offered through the Marketplace).
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\7\ See Technical Release 2013-02 available at http://www.dol.gov/ebsa/newsroom/tr13-02.html.
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These proposed regulations amend paragraph (g) of Sec. 2590.606-1
and paragraph (g) of Sec. 2590.606-4 and delete the two appendices
containing the model notices to better facilitate provision of updated
model election notices and solicit comment before promulgation of final
regulations.
II. Overview of the Proposed Regulations
These proposed regulations contain amendments to notice
requirements of the COBRA provisions of Part 6 of title I of ERISA to
better align the provision of guidance under the COBRA notice
requirements with the Affordable Care Act provisions already in effect,
as well as provide valuable flexibility to respond to provisions of
federal law that will become applicable in the future. The proposed
amendment will eliminate the current version of the model general
notice contained in the appendix of Sec. 2590.606-1 and the model
election notice contained in the appendix of Sec. 2590.606-4 as these
model notices are outdated. Additionally, these proposed regulations
make technical changes to the instruction language pointing to the
model notices in the appendices in paragraph (g) of Sec. 2590.606-1
and paragraph (g) of Sec. 2590.606-4. These changes will permit the
Department to amend the model notices as necessary and provide the most
current versions of the model notices on the Department's Web site.
These changes will also eliminate confusion that may result from
multiple versions of the model notices being available in different
locations. Contemporaneous with issuance of these proposed regulations,
the Department is also issuing updated versions of the model general
notice and model election notice, as well as guidance announcing the
availability of such updated notices. These updated notices reflect
that coverage is now available in the Marketplace and the updated model
election notice provides information on special enrollment rights in
the Marketplace. The Department invites comment on ways to improve or
streamline the model notices, whether the Department's provision of new
model notices is sufficient and, if not, whether the Department should
expand the underlying content requirements or require use of mandatory
language.
The updated model notices are available in modifiable, electronic
form on the Department's Web site at www.dol.gov/ebsa/cobra.html. As
with the earlier models, in order to use these model notices properly,
the plan administrator must complete them by filling in the blanks with
the appropriate plan information. Until rulemaking is finalized and
effective, the Department of Labor will consider use of the model
notices available on its Web site, appropriately completed, to be good
faith compliance with the notice content requirements of COBRA. The
Department notes that the use of the model notices is not required. The
model notices are provided solely for the purpose of facilitating
compliance with the applicable notice requirements.
III. Economic Impact and Paperwork Burden
A. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing and streamlining rules, and
of promoting flexibility.
Under Executive Order 12866, ``significant'' regulatory actions are
subject to the requirements of the executive order and review by the
Office of Management and Budget (OMB). Section 3(f) of Executive Order
12866 defines a ``significant regulatory action'' as an action that is
likely to result in a rule (1) having an annual effect on the economy
of $100 million or more, 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 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, OMB has determined that
this action is not ``significant'' within the meaning of section 3(f)
of the Executive Order. Therefore, the proposed rule was reviewed by
OMB. However, because the rule merely removes the model notices from
the CFR and the model notices themselves remain voluntary, the
Department does not expect this rulemaking to result in significant
costs or benefits.
B. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the APA (5
U.S.C. 551 et seq.) and are likely to have a significant economic
impact on a substantial number of small entities.
[[Page 26194]]
Unless an agency certifies that such a rule will not have a significant
economic impact on a substantial number of small entities, section 603
of the RFA requires the agency to present an initial regulatory
flexibility analysis at the time of the publication of the rulemaking
describing the impact of the rule on small entities. Small entities
include small businesses, organizations and governmental jurisdictions.
As discussed above, the proposed rule would amend the 2004 final
regulation by deleting references to the model notices and two
appendices containing the model notices to better facilitate provision
of updated model election notices and solicit comment before
promulgation of final regulations. The proposed rule does not make any
material changes to the notices. Therefore, the Department hereby
certifies that the proposed rule is not likely to have a significant
economic impact on a substantial number of small entities. The
Department welcomes public comments regarding its certification.
C. Paperwork Reduction Act
The Office of Management and Budget approved the COBRA model notice
information collection request under OMB Control Number 1210-0123,
which is scheduled to expire on October 31, 2016. As discussed above,
the proposed rule would amend the 2004 final regulation by deleting
references to the model notices and two appendices containing the model
notices to better facilitate provision of updated model election
notices and solicit comment before promulgation of final regulations.
The Department does not believe that these minor modifications
implement any substantive or material change to the information
collection; therefore, no further review is requested of OMB at this
time. The Department solicits comment on this understanding.
D. Congressional Review Act
This proposed rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and, if finalized, will be transmitted to
Congress and the Comptroller General for review.
E. 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 proposed rule does not
include any Federal mandate that may result in expenditures by State,
local, or tribal governments in the aggregate of more than $100
million, adjusted for inflation, or increase expenditures by the
private sector of more than $100 million, adjusted for inflation.
F. Federalism Statement
Executive Order 13132 (Aug. 4, 1999) outlines fundamental
principles of federalism and requires the adherence to specific
criteria by Federal agencies in the process of their formulation and
implementation of policies that have substantial direct effects on the
States, the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. This proposed rule does not have
federalism implications because it has no substantial direct effect on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Section 514 of ERISA provides, with
certain exceptions specifically enumerated, that the provisions of
titles I and IV of ERISA supersede any and all laws of the States as
they relate to any employee benefit plan covered under ERISA. The
requirements implemented in this rule do not alter the fundamental
provisions of the statute with respect to employee benefit plans, and
as such would have no implications for the States or the relationship
or distribution of power between the national government and the
States.
IV. Statutory Authority
The Department of Labor regulations are adopted pursuant to the
authority contained in 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169,
1181-1183, 1181 note, 1185, 1185a, 1185b, 1185c, 1185d, 1191, 1191a,
1191b, and 1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec.
401(b), Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec.
512(d), Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e),
Pub. L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124
Stat. 1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9,
2012).
List of Subjects in 29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Department of Labor
proposes to amend 29 CFR part 2590 as follows:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
1. The authority citation for part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1185c, 1185d, 1191, 1191a,
1191b, and 1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec.
401(b), Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec.
512(d), Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and
1562(e), Pub. L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-
152, 124 Stat. 1029; Secretary of Labor's Order 1-2011, 77 FR 1088
(January 9, 2012).
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2. Section 2590.606-1 is amended by removing the appendix to the
section, and revising paragraph (g) to read as follows:
Sec. 2590.606-1 General notice of continuation coverage.
* * * * *
(g) Model notice. The requirements of paragraph (c) of this section
are satisfied with respect to a single-employer group health plan if
the plan provides a notice in accordance with the model certificate
authorized by the Secretary, appropriately modified and supplemented as
necessary, consistent with guidance issued by the Secretary. Use of the
model notice is not mandatory. The model notice reflects the
requirements of this section as they would apply to single-employer
group health plans and must be modified if used to provide notice with
respect to other types of group health plans, such as multiemployer
plans or plans established and maintained by employee organizations for
their members. In order to use the model notice, administrators must
appropriately add relevant information where indicated in the model
notice, select among alternative language, and supplement the model
notice to reflect applicable plan provisions. Items of information that
are not applicable to a particular plan may be deleted. Use of the
model notice, appropriately modified and supplemented, will be deemed
to satisfy the notice content requirements of paragraph (c) of this
section.
* * * * *
0
3. Section 2590.606-4 is amended by removing the appendix to the
section, and revising paragraph (g) to read as follows:
Sec. 2590.606-4 Notice requirements for plan administrators.
* * * * *
(g) Model notice. The requirements of paragraph (b)(4) of this
section are satisfied with respect to a plan
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administrator if the plan provides a notice in accordance with the
model certificate authorized by the Secretary, appropriately modified
and supplemented as necessary, consistent with guidance issued by the
Secretary. Use of the model notice is not mandatory. The model notice
reflects the requirements of this section as they would apply to
single-employer group health plans and must be modified if used to
provide notice with respect to other types of group health plans, such
as multiemployer plans or plans established and maintained by employee
organizations for their members. In order to use the model notice,
administrators must appropriately add relevant information where
indicated in the model notice, select among alternative language, and
supplement the model notice to reflect applicable plan provisions.
Items of information that are not applicable to a particular plan may
be deleted. Use of the model notice, appropriately modified and
supplemented, will be deemed to satisfy the notice content requirements
of paragraph (b)(4) of this section.
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Signed this 1st day of May, 2014.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
[FR Doc. 2014-10416 Filed 5-2-14; 11:15 am]
BILLING CODE 4510-29-P