Burden Estimates

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

7

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

10

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.

11