PRA Form 14029 REG-120399-10 (2712 SS)

SUPPORTING STATEMENT
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
Section 2712 of the Public Health Service Act (PHS Act), incorporated into Code section 9815 by section 1563(f) of the
Patient Protection and Affordable Care Act, Public Law 111-148, prohibits group health plans and health insurance
issuers from rescinding coverage of an individual unless the individual (or a person seeking coverage on behalf of the
individual) performs an act, practice, or omission that constitutes fraud, or unless the individual makes an intentional
misrepresentation of material fact, as prohibited by the terms of the plan or coverage. The temporary Treasury
regulations provide that a group health plan or a health insurance issuer offering group health insurance coverage must
provide at least 30 days advance notice to an individual before coverage may be rescinded.

2. USE OF DATA
This is a third party disclosure requirement required under PHS Act 2712. Individuals whose coverage is about to be
rescinded may need to arrange for other coverage, make decisions about whether they wish to appeal the plan's or
issuer's decision to rescind their coverage, or make arrangements to defer the receipt of medical care that is either
optional or not needed immedaitely. Individuals receiving the disclosure may make an informed decision on these
matters rather than being caught off-guard.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
Plans and issuers may satisfy this disclosure requirement by electronic means if they comply with applicable electronic
disclosure requirements.

4. EFFORTS TO IDENTIFY DUPLICATION
The provision of the notice by either the plan or the issuer satisfies the obligation for both parties.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
Under the regulations, a single notice provided to an individual will satisfy the obligation for both parties responsible for
providing the notice, the plan and the issuer. Most small businesses maintaining a group health plan provide benefits
through health insurance coverage. In such a case, it is expected that the issuer of the health insurance coverage will
satisfy the notice obligation on behalf of both the plan and the issuer.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR
POLICY ACTIVITIES
Not applicable -- collection is one-time.

Form 14029 (Rev. 4-2009) Catalog Number 51944B Page 4

Department of the Treasury–Internal Revenue Service

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT
WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Not applicable.

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY
OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS,
AND DATA ELEMENTS
Comments are requested in the temporary regulations.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Not applicable.

11. JUSTIFICATION OF SENSITIVE QUESTIONS
Not applicable.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION
The Departments assume that rescissions are rare in the group market and that small group health plans are affected
by rescissions. The Departments assume that 100 small group health plan policies are rescinded in a year. The
Departments estimate that there is an average of 16 participants in each group policy rescineded . Based on these
numbers the Departments estimate that policies for approximately 1,600 individuals are rescinded during a year, which
would result in 1,600 notices being sent to affected participants. The Departments estimate that 15 minutes of legal
professional time would be required by the insurers of the 100 plans to prepare the notice and one minute per notice of
clerical time would be required to distribute the notice. This results in an hour burden of approximately 50 hours (25 to
DOL and 25 to IRS).

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
The Departments estimate that the notice will be one-page in length, material and print costs will be five cents per
page, and postage will be 44 cents per notice resulting in a per notice cost of 49 cents. The Departments estimate that
the cost burden associated with distributing the notices will be approximately $800 (50% to DOL and 50% to IRS).

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
Not applicable -- third party disclosure.

15. REASONS FOR CHANGE IN BURDEN
New ICR.

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not applicable.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
Not applicable.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB PRA SUBMISSION FORM
Not applicable.

19. REASON FOR EMERGENCY SUBMISSION
New statute with imminent applicability.

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service