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pdfSummary of Benefits and Coverage and Uniform Glossary NPRM
Supporting Statement for Paperwork Reduction Act Submission
Supporting Regulations Contained in 45 Code of Federal Regulations (CFR):
A. Background
The Patient Protection and Affordable Care Act, Pub. L. 111-148, was enacted on March
23, 2010; the Health Care and Education Reconciliation Act of 2010, Pub. L. 111-152,
was enacted on March 30, 2010 (collectively known as the “Affordable Care Act”). The
Affordable Care Act reorganizes, amends, and adds to the provisions of part A of title
XXVII of the Public Health Service Act (PHS Act) relating to group health plans and
health insurance issuers in the group and individual markets.1 The Affordable Care Act,
in pertinent part, amended part A of title XXVII of the PHS Act (42 U.S.C. 300gg-21 et
seq.) by adding section 2715 “Development and Utilization of Uniform Explanation of
Coverage Documents and Standardized Definitions.”
The Notice of Proposed Rulemaking (NPRM), that displayed at the Federal Register on
August 17, 2011, would implement the information disclosure provisions under PHS
Act section 2715. It would require collections of information by health insurance
issuers in the group and individual markets and group health plans (or in the case of
self-insured group health plans, third-party administrators).
B. Justification
1. Need and Legal Basis
Section 2715 of the PHS Act directs the Department of Health and Human Services
(HHS), the Department of Labor (DOL), and the Department of the Treasury
(collectively, the Departments), in consultation with the National Association of
Insurance Commissioners (NAIC) and a working group comprised of stakeholders, to
“develop standards for use by a group health plan and a health insurance issuer in
compiling and providing to applicants, enrollees, and policyholders and certificate
holders a summary of benefits and coverage explanation that accurately describes the
benefits and coverage under the applicable plan or coverage.” Plans and issuers are
required to begin providing the required disclosure (herein referred to as a “summary
of benefits and coverage” or “SBC”) no later than March 23, 2012.
To implement these disclosure requirements, collection of information requests relate
to the provision of the following:
1 The
Affordable Care Act adds section 715(a)(1) to the Employee Retirement Income Security Act (ERISA)
and section 9815(a)(1) to the Internal Revenue Code (the Code) to incorporate the provisions of part A of
title XXVII of the PHS Act into ERISA and the Code, and make them applicable to group health plans, and
health insurance issuers providing health insurance coverage in connection with group health plans.
1
Summary of benefits and coverage.
Coverage examples (as components of each SBC).
A uniform glossary of health coverage and medical terms.
Notice of modifications.
Group health plans and health insurance issuers will be required to use the SBC
template and instructions for completing the template, as authorized by the
Departments, to satisfy the section 2715 disclosure requirements.
For each benefits package offered, requested, or provided, as applicable, a plan or issuer
will populate the SBC template with the applicable plan or coverage information,
including the following: (1) a description of the coverage, including cost sharing, for
each category of benefits identified in guidance by the Secretary; (2) exceptions,
reductions, and limitations of the coverage; (3) the cost-sharing provisions of the
coverage, including deductible, coinsurance, and copayment obligations; (4) the
renewability and continuation of coverage provisions; (5) coverage examples that
illustrate common benefits scenarios (including pregnancy and serious or chronic
medical conditions) and related cost sharing; (6) identifying information for the plan or
coverage and contact information for questions and for obtaining a copy of the plan
document or the insurance policy, certificate, or contract of insurance (such as a
telephone number for customer service and an Internet address for obtaining a copy of
the plan document or the insurance policy, certificate, or contract of insurance); (7) for
plans and issuers that maintain one or more networks of providers, an Internet address
(or similar contact information) for obtaining a list of network providers; (8) for plans
and issuers that provide prescription drug coverage through a formulary, an Internet
address (or similar contact information) for obtaining information on prescription drug
coverage; (9) an Internet address (or similar contact information) where a consumer
may review and obtain the uniform glossary; and (10) premium (or, in the case of a selfinsured group health plan, cost of coverage).
In order to produce coverage examples (CEs) for various benefits scenarios, plans and
issuers will simulate claims processing for clinical care provided under each scenario
using the services, dates of service, billing codes, and allowed amounts provided by
HHS. Benefits scenarios will be based on recognized treatment guidelines available
through the National Guideline Clearinghouse. Allowed amounts for each service will
be based on national averages. Plans and issuers will follow the instructions for
estimating and displaying costs in a standardized format authorized by HHS. The
purpose of the coverage examples is to help consumers synthesize the impact of
multiple coverage provisions in order to compare the level of protection offered by a
plan or coverage for common benefit scenarios. Initially, three coverage examples will
be included in the SBC.
Because the statute additionally requires the Secretary to “provide for the development
of standards for the definitions of terms used in health insurance coverage,” including
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specified insurance-related and medical terms, the Departments have interpreted this
provision as requiring plans and issuers to make available a uniform glossary of health
coverage and medical terms that is two (2) double-sided pages in length. Plans and
issuers must include an Internet address (to either the plan’s or issuer’s website, or the
website of HHS or DOL) in the SBC for consumers to access the glossary and provide a
paper copy of the glossary within 7 days upon request. Plans and issuers may not
modify the glossary provided in guidance by the Departments.
Finally, “if a group health plan or health insurance issuer makes any material
modification in any of the terms of the plan or coverage involved (as defined for
purposes of section 102 of the ERISA) that is not reflected in the most recently provided
summary of benefits and coverage, the plan or issuer must provide notice of such
modification to enrollees not later than 60 days prior to the date on which such
modification will become effective.” Thus, the Departments will require plans and
issuers to provide 60-days advance notice of any material modification in any of the
terms of the plan or coverage that (1) affect the information required to be included the
SBC; (2) occur during the plan or policy year, other than in connection with renewal or
reissuance of the coverage; and (3) is not otherwise reflected in the most recently
provided SBC.
In developing the requirements for these collections of information, the Departments
have have incorporated in their entirety the documents recommended by the NAIC,
including the SBC template (with instructions, samples, and a guide for Coverage
examples calculations to be used in completing the SBC template) and the uniform
glossary. These collection instruments were developed and agreed to by the entire
NAIC working group and recommended to the Departments by the full NAIC
membership .
2. Information Users
Beginning in 2012, this information collection will help to ensure that approximately
180 million consumers shopping for, or enrolled in, private, individually purchased or
employer-sponsored coverage receive the consumer protections of the Affordable Care
Act. Employers, employees, and individuals will use this valuable information to
compare plan or coverage options prior to selecting coverage and to understand the
terms of, and extent of medical benefits offered by, their plan or coverage (or
exceptions to such coverage or benefits) once they have coverage.
3. Use of Information Technology
The SBC template will be made available to plans and issuers in MS Word, a widely
available word processing application. Plans and issuers may choose to populate the
template manually or to develop systems to capture and report the relevant data in the
required standardized format.
3
With respect to the coverage examples, HHS will make available in an Excel spreadsheet
the clinical benefits scenarios, including specific services, dates of service, billing codes,
and allowed charges associated with each scenario. Plans and issuers will simulate
processing of claims under each benefits scenario to generate an illustration of costs a
consumer could expect to share with the plan or coverage. Plans and issues should
eventually be able to generate these outputs using automated systems for each benefits
package they offer. At the outset, however, calculations for the Coverage examples may
need to be performed manually, such as using Excel.
Once completed, the SBC may be provided either in paper form or, if certain safeguards
are met, in electronic form. Electronic disclosure in the individual and group markets,
where appropriate, will help reduce the cost and burden of distributing this
information.
4. Duplication of Efforts
Under the health care reform insurance Web portal requirements at 45 CFR 159.200,
HHS collects summary information about health insurance products that are available
in the individual and small group markets. The Web portal collection is similar to a
subset of this information collection (i.e., the proposed requirement to provide an SBC
to individuals who request information about health insurance coverage options prior
to submitting an application). To reduce duplication, this NPRM would deem individual
market issuers that comply with the Web portal collection compliant with this such
collection. The Departments nonetheless expect some duplication, as issuers will be
required to provide such information in paper form upon request.
In addition, under the disclosure requirements at 29 CFR 2520, ERISA-covered group
health plans are already required to disclose to participants and beneficiaries similar
plan information in a summary plan description (SPD). This NPRM would require plans
to summarize such SPD information so consumers may better understand the terms of
the plan and more easily compare plan options. While this collection will thus duplicate
some information collected under ERISA, the burden of compiling and providing it in
the required standardized format is reduced, because it is readily available to plan
sponsors and administrators and disclosed as part of their current operations.
5. Small Businesses
Small businesses are not significantly affected by this collection. The information used
to populate the form is readily available and disclosed by plans and issuers as part of
their current operations. No capital costs are required for this effort. The electronic
distribution of information should also ease burden among some plans and issuers.
Limiting distribution of the SBC to one for covered individuals known to reside at the
same last address, as well as other provisions designed to reduce unnecessary
duplication, will also reduce the frequency of reporting. Finally, the vast majority of
health insurance issuers and third-party administrators, the entities primarily impacted
4
by this collection, are not small businesses.2 Small businesses are not significantly
affected by this collection.
6. Less Frequent Collection
This collection is required to fulfill the statutory requirements under PHS Act section
2715. This collection will ensure that, at multiple points in the enrollment process,
consumers have accurate information with which to understand and compare plan and
coverage options. If this collection is not conducted, or is conducted less frequently,
consumers will not receive the protections to which they are entitled under the
Affordable Care Act. If, however, information collected in the first instance does not
change in subsequent collections, duplicate collections are typically not required during
the plan or policy year. Furthermore, multiple collections are not required in the case of
family coverage, if covered individuals are known to reside at the same address. These
provisions will limit the collection burden on the industry while providing consistent
and clear information to consumers.
7. Special Circumstances
When an individual requests information about or requests an application for coverage,
or upon application, health insurance issuers are required to provide the SBC to
individuals in the individual market and group health plans (or the plan sponsor, as
applicable) in the fully-insured group market. Plans and issuer must also provide the
SBC to special enrollees, upon request for enrollment pursuant to a special enrollment
right. In such instances, disclosure must occur as soon as practicable, but not later than
7 days after receipt of the request. Similarly, upon request at anytime, plans and issuers
are required to provide the SBC as soon as practicable, but not later than 7 days after
2 As
discussed in the Web Portal interim final rule (75 FR 24481), HHS examined the health insurance
industry in depth in the Regulatory Impact Analysis prepared for the proposed rule on establishment of the
Medicare Advantage program (69 FR 46866, August 3, 2004). In that analysis, HHS determined that there
were few if any insurance firms underwriting comprehensive health insurance policies (in contrast, for
example, to travel insurance policies or dental discount policies) that fell below the size thresholds for
‘‘small’’ business established by the Small Business Association (SBA). Currently, the SBA size threshold is $7
million in annual receipts for both health insurers (North American Industry Classification System, or NAICS,
Code 524114) and TPAs (NAICS Code 524292). Additionally, as discussed in the Medical Loss Ratio interim
final rule (75 FR 74918), HHS used a data set created from 2009 National Association of Insurance
Commissioners (NAIC) Health and Life Blank annual financial statement data to develop an updated estimate
of the number of small entities that offer comprehensive major medical coverage in the individual and group
markets. For purposes of that analysis, HHS used total Accident and Health (A&H) earned premiums as a
proxy for annual receipts. HHS estimated that there were 28 small entities with less than $7 million in A&H
earned premiums offering individual or group comprehensive major medical coverage; however, this
estimate may overstate the actual number of small health insurance issuers offering such coverage, since it
does not include receipts from these companies’ other lines of business. These 28 small entities represent
about 6.4 percent of the approximately 440 health insurers that are accounted for in this Economic Impact
Analysis of the NPRM. Based on this calculation, the Departments assume that there are an equal percentage
of TPAs that are small entities. That is, 48 small entities represent about 6.4 percent of the approximately 750
TPAs that are accounted for in this RIA.
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the receipt of the request. Depending on the number of such requests, plans and issuers
may have to provide several copies of the SBC.
8. Federal Register/Outside Consultation
The Departments recognize the need for public comment on this NPRM. The
Departments are seeking a full 3-year PRA approval and a full public comment period.
As required by PHS Act section 2715, the Departments consulted on this proposed
collection with the NAIC, which convened a multi-stakeholder working group composed
of representatives of consumer advocacy organizations, health insurance issuers, health
care professionals, patient advocates including those representing individuals with
limited English proficiency, and other qualified individuals. The NAIC process,
conducted over many months, was open to the public and permitted oral and written
comments from interested parties. Both industry and consumer groups sponsored
consumer focus-group and cognitive interview testing to determine the usability of the
forms. Additionally, the NAIC invited expert comment on the readability of the forms.
These forms were discussed and agreed to by the working group and recommended to
the Departments by the NAIC.
In addition to consultation with the NAIC, the Departments consulted with industry
experts, including health insurance issuers and groups representing employers with
self-funded health plans, to gain insight into the hour and burden associated with this
collection, the tasks and level of effort required, and the availability of data. The
proposed collection reflects this extensive consultation.
9. Payments/Gifts to Respondents
There will be no payments or gifts to respondents.
10. Confidentiality
This collection requires the disclosure of information regarding, among other things,
premium rates, cost-sharing, covered benefits, and exceptions, reductions and
limitations on coverage by plans and issuers directly to consumers. The purpose of this
collection is to summarize information about the terms of the applicable plan or
coverage that is described in fuller detail in the policy, certificate, or contract of
insurance or the plan document. Therefore, the Departments believe this collection
does not require the disclosure of trade secrets or other confidential information.
11. Sensitive Questions
There are no sensitive questions included in this collection effort.
12. Burden Estimate (Hours & Wages)
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Each group health plan and health insurance issuer offering group or individual health
insurance coverage must provide a summary of benefits and coverage (SBC) to entities
and individuals at specified points in the enrollment process. This disclosure must
include, among other things, coverage examples that illustrate common benefits
scenarios and related cost sharing. Additionally, plans and issuers must make the
uniform glossary available in electronic form, with paper upon request, and provide 60days advance notice of any material modifications in the plan or coverage.
Although coverage examples are part of the SBC disclosure, the Departments calculate
separate burden estimates for purposes of this section, assuming the information
collection request for the SBC (not including coverage examples) totals six (6) sides of a
page in length and assuming the information collection request for coverage examples
totals two (2) sides of a page in length.
A. Department of Labor and Department of the Treasury
The Departments estimate 858 respondents each year from 2011-2013. This estimate
reflects approximately 220 issuers offering comprehensive major medical coverage in
the small and large group markets and approximately 638 third-party administrators
(TPAs).3
To account for variation in firm size, the Departments estimate a weighted burden on
the basis of issuer’s 2009 total earned premiums for comprehensive major medical
coverage.4 The Departments define small issuers as those with total earned premiums
less than $50 million; medium issuers as those with total earned premiums between
$50 million and $999 million; and large issuers as those with total earned premiums of
$1 billion or more. Accordingly, the Departments estimate approximately 70 small, 115
medium, and 35 large issuers. Similarly, the Departments estimate approximately 204
small, 332 medium, and 102 large TPAs.
2011 Burden Estimate
With respect to employer-sponsored coverage, the Departments assume fully-insured plans will rely on
health insurance issuers and self-insured plans will rely on TPAs to generate, review, update, and distribute
SBCs (including coverage examples). While plans may prepare the SBC disclosures internally, the
Departments make this simplifying assumption because most plans appear to rely on issuers and TPAs for the
purpose of administrative duties, such as enrollment and claims processing. Thus, the Departments use
health insurance issuers and TPAs as the unit of analysis for the purposes of estimating administrative costs.
The Departments estimate there are a total of 440 issuers and 750 TPAs. Because the Departments of Labor
and the Treasury share the hour and cost burden for fully-insured plans with the Department of Health and
Human Services, these hour and cost burden estimates for group health plans are calculated using
approximately half the number of issuers (220) and 85% of the number of TPAs (638).
3
The premium revenue data come from the 2009 NAIC financial statements, also known as “Blanks,” where
insurers report information about their various lines of business.
4
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The estimated hour burden and equivalent cost for the collections of information
are as follows:
While the disclosures in this NPRM are not required until March 2012, the Departments
estimate a one-time administrative cost of about $36,000,000 across the industry and a
total of about 680,000 burden hours to prepare for the provisions of these proposed
regulations. This calculation is made assuming issuers and TPAs will need to implement
two principal tasks: (1) develop teams to analyze current workflow processes in
relation to the new requirements and (2) make appropriate changes to IT systems and
processes.
With respect to task (1), the Departments estimate about 97,000 burden hours and an
equivalent cost of about $4,800,000. The Departments calculate these estimates as
follows:
Task 1: Analyze current workflow and new rules
Hourly
Wage
Rate
Small Issuer / TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
36
$1,900
54
$2,900
72
$3,800
Benefits/Sales
Professionals
$41.94
40
$1,700
60
$2,500
80
$3,400
Attorneys
$85.44
4
$340
6
$510
8
$680
80
$3,900
120
$5,900
160
$7,900
22,000
$1,100,000
53,000
$2,600,000
22,000
$1,100,000
Total per
issuer/ TPA
Total for all
issuers/TPAs
With respect to task (2), the Departments estimate about 580,000 burden hours and an
equivalent cost of about $31,000,000. The Departments calculate these estimates as
follows:
Task 2: IT Changes
Hourly
Wage
Rate
IT Professionals
Total per
issuer/TPA
Total for all
issuers/TPAs
$53.26
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
480
$26,000
720
$38,000
960
$51,000
480
$26,000
720
$38,000
960
$51,000
130,000
$7,100,000
320,000
$17,000,000
130,000
$7,000,000
The Departments assume the total one-time administrative burden will be divided
equally between 2011 and 2012. Thus, in 2011, the Departments estimate a one-time
8
administrative cost of about $18,000,000 across the industry and about 340,000
burden hours. The Departments assume issuers and TPAs will incur no other costs in
2011 related to these collection of information requirements.
2012 Burden Estimate
The estimated hour burden and equivalent cost for the collections of information
are as follows:
The Departments estimate there will be about 77,000,000 SBC responses in
2012.
The Departments assume that of the total number of SBC responses in 2012,
38% would be provided electronically in the small and large group markets.
Accordingly, the Departments estimate that about 29,000,000 SBCs would be
electronically distributed, and about 48,000,000 SBCs would be distributed in
paper form. The Departments assume there are no costs associated with
electronic disclosure; there are costs only with regard to paper disclosure.
Summary of benefits and coverage – The SBC requires issuers/TPAs to summarize
the terms of the coverage involved, such as covered benefits, cost sharing, and
exceptions, reductions, and limitations on coverage. The Departments estimate an hour
burden of about 820,000 hours and an equivalent cost of about $24,000,000. The
Departments calculate these estimates as follows:
Equivalent Costs for Producing SBCs (not including coverage examples)
Small Issuer/TPA
Medium Issuer/TPA
Large Issuer/TPA
Hourly
Wage
Rate
Hours
Equivalent
Cost
Hours
Equivalent
Cost
Hours
Equivalent
Cost
IT Professionals
$53.26
1.5
$80
1.5
$80
1.5
$80
Benefits/Sales
Professionals
$41.94
1.5
$63
1.5
$63
1.5
$63
Financial Managers
$75.32
0.5
$38
0.5
$38
0.5
$38
Attorneys
$85.44
0.5
$43
0.5
$43
0.5
$43
Total per issuer/TPA
4
$220
4
$220
4
$220
Total for all issuers/
TPAs
1,100
$61,000
1,800
$100,000
550
$31,000
Equivalent Costs for Distributing SBCs (including coverage examples)
Hourly Wage
Rate
Hours per
SBC
9
Total Number
of SBCs
Total Hours
Total Equivalent
Cost
Clerical Staff
$29.15
0.017
48,000,000
820,000
$24,000,000
Coverage examples – A set of three coverage examples is included in each SBC and will
require issuers and TPAs to simulate claims processing for services under each
scenario, applying the plan’s or coverage’s cost-sharing rules and benefit limitations
and exclusions as appropriate. The Departments estimate an hour burden of about
100,000 hours and an equivalent cost of about $5,800,000. The Departments calculate
these estimates as follows:
Equivalent Costs for Producing Coverage examples
Hourly
Wage
Rate
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
45
$2,400
45
$2,400
45
$2,400
Benefits/Sales
Professionals
$41.94
45
$1,900
45
$1,900
45
$1,900
Financial Managers
$75.32
15
$1,100
15
$1,100
15
$1,100
Attorneys
$85.44
15
$1,300
15
$1,300
15
$1,300
Total per issuer/TPA
120
$6,700
120
$6,700
120
$6,700
Total for all issuers/
TPAs
33,000
$1,900,000
53,000
$3,000,000
16,000
$900,000
Uniform glossary – The Departments assume that in 2012, issuers and TPAs will begin
responding to requests of covered individuals for paper copies of the uniform glossary,
and that 2.5% of covered individuals who receive the SBC in paper form will request
glossaries (that is, about 1,200,000 glossary requests). The Departments estimate the
burden and equivalent cost of providing the glossary to be 2.5% of the burden and cost
of distributing the SBC in paper form. Accordingly, in 2012, the Departments estimate
an hour burden of about 21,000 hours and an equivalent cost of about $600,000.
One-time administrative costs – As mentioned above, the Departments estimate a
one-time administrative cost of about $36,000,000 across the industry and a total of
about 680,000 burden hours, and assume this burden will be equally divided between
2011 and 2012. Thus, in 2012, the Departments estimate a one-time administrative cost
of about $18,000,000 across the industry and about 340,000 burden hours.
The total 2012 burden estimate is about $48,000,000. The total number of burden
hours is about 1,300,000 hours.
2013 Burden Estimate
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The estimated hour burden and equivalent cost for the collections of information
are as follows:
Summary of benefits and coverage – The number of SBC responses in 2013 is
assumed to remain constant at 2012 levels (that is, 77,000,000 responses) . Thus, in
2013, the Departments again estimate an hour burden of about 820,000 hours and an
equivalent cost of about $24,000,000.
Coverage examples – The Departments again estimate an hour burden of about
100,000 hours and an equivalent cost of about $5,800,000 to produce coverage
examples in 2013.
Notice of modifications – The Departments assume that in 2013, issuers and TPAs will
begin sending notices of modifications to covered individuals, and that 2% of covered
individuals would receive such notice (that is, about 1,500,000 notices). The
Departments estimate the burden and cost of providing the notices to be 2% of the
combined burden and cost of the SBCs (including the coverage examples). Accordingly,
in 2013, the Departments estimate an hour burden of about 18,000 hours and an
equivalent cost of about $600,000.
Maintenance administrative costs – In 2013, the Departments assume that issuers
and TPAs will need to make updates to address changes in requirements, and, thus,
incur 15% of the one-time administrative burden. Accordingly, the estimated hour
burden is about 100,000 hours, and the estimated total cost is about $5,400,000. The
Departments calculate these estimates as follows:
Hourly
Wage
Rate
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
46.2
$2,500
69.3
$3,700
92.4
$4,900
Benefits / Sales
Professionals
$41.94
33.6
$1,800
50.4
$2,700
67.2
$3,600
Attorneys
$85.44
4.2
$220
6.3
$340
8.4
$450
Total per issuer/TPA
84
$4,500
126
$6,700
168
$8,900
Total for all issuers/
TPAs
23,000
$1,200,000
56,000
$3,000,000
23,000
$1,200,000
The total 2013 cost estimate is about $37,000,000. The total number of burden hours is
about 1,100,000 hours.
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B. Department of Health and Human Services
The Department estimates 333 respondents each year from 2011-2013. This estimate
reflects the approximately 220 issuers offering comprehensive major medical coverage
in the individual market and to fully-insured non-Federal governmental plans, and 113
TPAs acting as service providers for self-insured non-Federal governmental plans.5
To account for variation in firm size, the Department estimates a weighted burden on
the basis of issuer’s 2009 total earned premiums for comprehensive major medical
coverage. 6 The Department defines small issuers as those with total earned premiums
less than $50 million; medium issuers as those with total earned premiums between
$50 million and $999 million; and large issuers as those with total earned premiums of
$1 billion or more. Accordingly, the Department estimates approximately 70 small, 115
medium, and 35 large issuers. Similarly, the Department estimates approximately 36
small, 59 medium, and 18 large TPAs.
2011 Burden Estimate
The estimated hour burden and equivalent cost for the collections of information
are as follows:
While the disclosures in this NPRM are not required until March 2012, the Department
estimates a one-time administrative cost of about $14,000,000 across the industry and
a total of about 270,000 burden hours to prepare for the provisions of the provisions of
these proposed regulations. This calculation is made assuming issuers and TPAs will
need to implement two principal tasks: (1) develop teams to analyze current workflow
processes in relation to the new requirements and (2) make appropriate changes to IT
systems and processes.
With respect to task (1), the Department estimates about 38,000 burden hours and an
equivalent cost of about $1,900,000. The Department calculates these estimates as
follows:
With respect to the individual market, issuers are responsible for generating, reviewing, updating, and
distributing SBCs. With respect to non-Federal governmental plans, the Department assumes fully-insured
plans will rely on health insurance issuers and self-insured plans will rely on TPAs to perform these functions.
While plans may prepare the SBC disclosures internally, the Department makes this simplifying assumption
because most plans appear to rely on issuers and TPAs for the purpose of administrative duties, such as
enrollment and claims processing. Thus, the Department uses health insurance issuers and TPAs as the unit of
analysis for the purposes of estimating administrative costs. The Departments estimate there are a total of
440 issuers and 750 TPAs. Because the Department of Health and Human Services shares the hour and cost
burden for fully-insured plans with the Departments of Labor and the Treasury, these hour and cost burden
estimates for individual issuers and TPAs serving self-insured non-Federal governmental plans are calculated
using approximately half the number of issuers (220) and 15% of the number of TPAs (113).
5
6 The
premium revenue data come from the 2009 NAIC financial statements, also known as “Blanks,” where
insurers report information about their various lines of business
12
Task 1: Analyze current workflow and new rules
Hourly
Wage
Rate
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
36
$1,900
54
$2,900
72
$3,800
Benefits/Sales
Professionals
$41.94
40
$1,700
60
$2,500
80
$3,400
Attorneys
$85.44
4
$340
6
$510
8
$680
80
$3,900
120
$5,900
160
$7,900
8,500
$420,000
21,000
$1,000,000
8,500
$450,000
Total per issuer/TPA
Total for all
issuers/TPAs
With respect to task (2), the Department estimates about 230,000 burden hours and an
equivalent cost of about $12,000,000. The Department calculates these estimates as
follows:
Task 2: IT Changes
Hourly
Wage
Rate
IT Professionals
$53.26
Total per issuer/TPA
Total for all
issuers/TPAs
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
480
$26,000
720
$38,000
960
$51,000
480
$26,000
720
$38,000
960
$51,000
51,000
$2,700,000
125,000
$6,700,000
51,000
$ 2,700,000
The Department assumes the total one-time administrative burden will be divided
equally between 2011 and 2012. Thus, in 2011, the Department estimates a one-time
administrative cost of about $7,000,000 across the industry and about 135,000 burden
hours. The Department assumes issuers and TPAs will incur no other costs in 2011
related to these collection of information requirements.
2012 Burden Estimate
The estimated hour burden and equivalent cost for the collections of information
are as follows:
The Department estimates there will be about 13,000,000 SBC responses in
2012.
The Department assumes that of the total number of SBC responses in 2012,
38% would be provided electronically in the group market, and 70% would be
13
provided electronically in the individual market. Accordingly, the Department
estimates that about 5,900,000 SBCs would be electronically distributed, and
about 7,400,000 SBCs would be distributed in paper form. The Department
assumes there are no costs associated with electronic disclosures; there are
costs only with regard to paper disclosures.
Summary of benefits and coverage – The SBC requires issuers and TPAs to
summarize the terms of the coverage involved, including covered benefits, cost sharing,
and exceptions, reductions, and limitations on coverage. The Department estimates an
hour burden of about 170,000 hours and an equivalent cost of about $5,000,000. The
Department calculates these estimates as follows:
Equivalent Costs for Producing SBCs (not including coverage examples)
Hourly
Wage
Rate
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
1.5
$80
1.5
$80
1.5
$80
Benefits/Sales
Professionals
$41.94
1.5
$63
1.5
$63
1.5
$63
Financial Managers
$75.32
0.5
$38
0.5
$38
0.5
$38
Attorneys
$85.44
0.5
$43
0.5
$43
0.5
$43
Total per issuer/TPA
4
$220
4
$220
4
$220
Total for all issuers/
TPAs
420
$24,000
700
$39,000
200
$12,000
Equivalent Costs for Distributing SBCs (including coverage examples)
Hourly Wage
Rate
Hours per SBC
Total Number
of SBCs
Total Hours
Total
Equivalent
Cost
Clerical Staff,
Individual Market
$29.15
0.033
2,700,000
89,000
$2,600,000
Clerical, Group
Market
$29.15
0.017
4,700,000
80,000
$2,300,000
7,400,000
170,000
$4,900,000
Total
Coverage examples – A set of three coverage examples is included in each SBC and will
require issuers and TPAs to simulate claims processing for services under each
scenario, applying the plan’s or coverage’s cost-sharing rules and benefit limitations
and exclusions as appropriate. The Department estimates an hour burden of about
40,000 hours and an equivalent cost of about $2,300,000. The Department calculates
these estimates as follows:
14
Equivalent Costs for Producing Coverage examples
Hourly
Wage
Rate
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
45
$2,400
45
$2,400
45
$2,400
Benefits/Sales
Professionals
$41.94
45
$1,900
45
$1,900
45
$1,900
Financial Managers
$75.32
15
$1,100
15
$1,100
15
$1,100
Attorneys
$85.44
15
$1,300
15
$1,300
15
$1,300
120
$6,700
120
$6,700
120
$6,700
13,000
$710,000
21,000
$1,200,000
6,400
$350,000
Total per issuer/ TPA
Total for all
issuers/TPAs
Uniform glossary – The Department assumes that in 2012, issuers and TPAs will begin
responding to requests of covered individuals for paper copies of the uniform glossary,
and that 2.5% of covered individuals who receive the SBC in paper form will request
glossaries (that is, about 190,000 glossary requests). The Departments estimate that
the burden and cost of providing the glossary to be 2.5% of the burden and cost of
distributing the SBC in paper form. Accordingly, in 2012, the Department estimates an
hour burden of about 4,300 hours and an equivalent cost of about $120,000.
One-time administrative costs: As mentioned above, the Department estimates a onetime administrative cost of about $14,000,000 across the industry and a total of about
270,000 burden hours, and assumes this burden will be equally divided between 2011
and 2012. Thus, in 2012, the Department estimates a one-time administrative cost of
about $7,000,000 across the industry and about 135,000 burden hours.
The total 2012 burden estimate is about $14,000,000. The total number of burden
hours is 350,000 hours.
2013 Burden Estimate
The estimated hour burden and equivalent cost for the collections of information
are as follows:
Summary of benefits and coverage – The number of SBC responses in 2013 is
assumed to remain constant at 2012 levels (that is, 13,000,000 responses). Thus, in
2013, the Department again estimates an hour burden of about 170,000 hours and an
equivalent cost of about $5,000,000.
Coverage examples – The Department again estimates an hour burden of about 40,320
hours an equivalent cost of about $2,300,000 to produce coverage examples in 2013.
15
Notice of modifications – The Department assumes that in 2013, issuers will begin
sending notices of modifications to covered individuals, and that 2% of covered
individuals will receive such notice (that is, 260,000 responses). The Department
estimates the burden and cost of providing the notices to be 2% of the combined
burden and cost of the SBCs (including the coverage examples). Accordingly, in 2013,
the Department estimates an hour burden of about 4,200 hours and an equivalent cost
of about $150,000 associated with approximately 260,000 notices of modifications.
Uniform Glossary – The Department assumes that in 2013, issuers and TPAs will
continue to respond to glossary requests, and that 5% of covered individuals who
receive the SBC in paper form will request glossaries (that is, about 370,000 glossary
requests). The Department estimates the burden and cost of providing the notices to be
5% of the burden and cost of distributing the SBC in paper form. Accordingly, in 2013,
the Department estimates an hour burden of 8,500 hours and an equivalent cost of
about $240,000.
Maintenance administrative costs – In 2013, the Department assumes that issuers
and TPAs will need to make updates to address changes in requirements, and, thus,
incur 15% of the one-time administrative burden. Accordingly, the estimated hour
burden is about 40,000 hours, and the estimated total cost is about $2,000,000. The
Department calculates these estimates as follows:
Hourly
Wage
Rate
Small Issuer/TPA
Equivalent
Hours
Cost
Medium Issuer/TPA
Equivalent
Hours
Cost
Large Issuer/TPA
Equivalent
Hours
Cost
IT Professionals
$53.26
46.2
$2,500
69.3
$3,700
92.4
$4,900
Benefits / Sales
Professionals
$41.94
33.6
$1,800
50.4
$2,700
67.2
$3,600
Attorneys
$85.44
4.2
$220
6.3
$340
8.4
$450
Total per issuer/TPA
84
$4,500
126
$6,700
168
$8,900
Total for all issuers/
TPAs
8,900
$470,000
22,000
$1,100,000
8,900
$470,000
The total 2013 cost estimate is about $9,800,000. The total number of burden hours is
about 260,000 hours.
13. Capital Costs
A. Department of Labor and Department of the Treasury
2012 Cost Burden Estimate
16
The Departments estimate that there will be about 77,000,000 SBC responses
(including coverage examples) in 2012.
The Departments assume that of the total number of SBC responses, 38% would
be provided electronically in the small and large group markets. Accordingly,
the Departments estimate that about 29,000,000 SBCs would be electronically
distributed, and about 48,000,000 SBCs would be distributed in paper form. The
Departments assume there are no costs associated with electronic disclosures;
there are costs only with regard to paper disclosures.
The Departments estimate grayscale printing costs at $0.03 per single side of a
page.
The Departments assume that in 2012, issuers and TPAs will begin responding
to requests of covered individuals for paper copies of the uniform glossary, and
that 2.5% of covered individuals who receive the SBC in paper form will request
glossaries (that is, about 1,200,000 glossary requests) . The Departments
estimate the cost of providing the glossary in paper form to be 2.5% of the cost
of distributing the paper copies of the SBC, plus an additional cost burden for
$0.49 for each glossary (including $0.44 for first-class postage and $0.05 for
supply costs).
The estimated cost burdens for the collections of information are as follows:
Cost Burden for Printing SBCs
Printing Costs
Cost per SBC
Total SBCs
Total Cost Burden
$0.12
48,000,000
$5,800,000
Printing Cost Per Coverage
Example
Total Number of Coverage
Examples Printed
Total Cost Burden
$0.06
48,000,000
$2,900,000
Cost Burden for Printing Coverage examples
Printing Costs
Cost Burden for Printing and Mailing Uniform Glossaries
Printing Costs
Printing Cost Per
Glossary
Mailing Costs Per
Glossary
Total Glossaries
Requested/Printed
Total Cost Burden
$0.12
$0.49
1,200,000
$730,000
2013 Cost Burden Estimate
The Departments make the same assumptions regarding the number of SBC
responses (including coverage examples), electronic distribution, and printing
costs in 2013 as in 2012.
The Departments assume that in 2013, issuers and TPAs would begin sending
notices of modifications to covered individuals and that 2% of covered
individuals would receive such notice (that is, about 1,500,000 notices). The
17
Departments estimate the cost of providing the notices to be 2% of the cost of
the providing SBCs (including coverage examples). Notices are assumed to be
equal in length to the SBC (that is, six (6) sides of a page).
The Departments assume 5% of covered individuals who receive the SBC in
paper form will request paper copies of the uniform glossary (that is, about
2,400,000 glossary requests). The Departments estimate the cost of providing
the notices to be 5% of the cost of distributing paper copies of the SBC and make
the same assumptions about postage and supply costs in 2013 as in 2012.
The estimated cost burdens for the collections of information are as follows:
Cost Burden for Printing SBCs
Printing Costs
Cost per SBC
Total SBCs
Total Cost Burden
$0.12
48,000,000
$5,800,000
Printing Cost Per Coverage
Example
Total Number of Coverag
Examples Printed
Total Cost Burden
$0.06
48,000,000
$2,900,000
Cost Burden for Printing Coverage examples
Printing Costs
Cost Burden for Printing and Mailing Notices of Modifications
Printing Costs
Printing Cost Per
Notice
Mailing Costs Per
Notice
Total Notices
Printed
Total Cost Burden
$0.18
$0.49
960,000
$640,000
Cost Burden for Printing and Mailing Uniform Glossaries
Printing Costs
Printing Cost Per
Glossary
Mailing Costs Per
Glossary
Total Glossaries
Requested/Printed
Total Cost Burden
$0.12
$0.49
2,400,000
$1,500,000
B. Department of Health and Human Services
2012 Cost Burden Estimate
The Department estimates there will be about 13,000,000 SBC responses
(including coverage examples) in 2012.
The Department assumes that of the total number of SBC responses, 38% would
be provided electronically in the group market, and 70% would be provided
electronically in the individual market. Accordingly, the Department estimates
that about 5,900,000 SBCs would be electronically distributed, and about
7,400,000 SBCs would be distributed in paper form. The Department assumes
18
there are no costs associated with electronic disclosures; there are costs only
with regard to paper disclosures.
The Department estimates grayscale printing costs at $0.03 per single side of a
page.
The Department assumes that in 2012, issuers and TPAs will begin responding
to requests of covered individuals for paper copies of the uniform glossary, and
that 2.5% of covered individuals who receive the SBC in paper form will request
glossaries (that is, about 190,000 glossary requests). The Department estimates
the cost of providing the glossary in paper form to be 2.5% of the cost of
distributing paper copies of the SBC, plus an additional cost of $0.49 for each
glossary (including $0.44 for first-class postage and $0.05 for supply costs).
The estimated cost burdens for the collections of information are as follows:
Cost Burden for Printing SBCs
Printing Costs
Cost per SBC
Total SBCs
Total Cost Burden
$0.12
7,400,000
$890,000
Printing Cost Per Coverage
Example
Total Number of Coverage
Examples Printed
Total Cost Burden
$0.06
7,400,000
$440,000
Cost Burden for Printing Coverage examples
Printing Costs
Cost Burden for Printing and Mailing Uniform Glossaries
Printing Costs
Printing Cost Per
Glossary
Mailing Costs Per
Glossary
Total Glossaries
Requested/Printed
Total Cost Burden
$0.12
$0.49
190,000
$120,000
2013 Cost Burden Estimate
The Department makes the same assumptions regarding the number of SBC
responses (including coverage examples), electronic distribution, and printing
costs in 2013 as in 2012.
The Department assumes that in 2013, issuers and TPAs would begin sending
notices of modifications to covered individuals and that 2% of covered
individuals would receive such notice (that is, about 260,000 notices). The
Department estimates the cost of providing the notices to be 2% of the cost of
the providing SBCs (including coverage examples). Notices are assumed to be
equal in length to the SBC (that is, six (6) sides of a page).
The Department assumes 5% of covered individuals who receive the SBC in
paper form will request paper copies of the uniform glossary (that is, about
370,000 glossary requests). The Department estimates the cost of providing the
19
glossary to be 5% of the cost of distributing paper copies of the SBC and makes
the same assumptions about postage and supply costs in 2013 as in 2012.
The estimated cost burdens for the collections of information are as follows:
Cost Burden for Printing SBCs
Cost per SBC
Total SBCs
Total Cost Burden
$0.12
7,400,000
$890,000
Printing Cost Per Coverage
Example
Total Number of Coverage
Examples Printed
Total Cost Burden
$0.06
7,400,000
$440,000
Printing Costs
Cost Burden for Printing Coverage examples
Printing Costs
Cost Burden for Printing and Mailing Notices of Modifications
Printing Cost Per
Notice
Mailing Costs Per
Notice
Total Notices
Printed
Total Cost Burden
$0.18
$0.49
150,000
$100,000
Printing Costs
Cost Burden for Printing and Mailing Uniform Glossaries
Printing Cost Per
Glossary
Mailing Costs Per
Glossary
Total Glossaries
Requested/Printed
Total Cost Burden
$0.12
$0.49
370,000
$230,000
Printing Costs
14. Cost to Federal Government
These information collection tools were developed by the Federal government for use
by the industry. The Departments will periodically update these forms, as necessary.
But because there are no program costs associated with this collection, the annualized
cost to the Federal government is minimal.
15. Changes to Burden
This is a new data collection activity.
16. Publication/Tabulation Dates
This collection of information will generally begin on March 23, 2012 and will be
conducted continuously with respect to consumers shopping for, enrolling in, or
renewing or reenrolling in a plan or coverage.
17. Expiration Date
20
The Departments request an exemption from displaying the expiration date, as these
forms will be used on a continuous basis. To include an expiration date would result in
having to discard a potentially large number of forms.
18. Certification Statement
There are no exceptions to the certification statement.
21
| File Type | application/pdf |
| File Title | Data Disclosure NPRM |
| Author | DHHS |
| File Modified | 2011-08-17 |
| File Created | 2011-08-17 |