SUPPORTING STATEMENT
TD 9491 - Affordable Care Act Notice of Recession (REG-120399-10)
OMB No. 1545-2180
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. This standard applies to all rescissions, whether in the group or individual insurance market, or self-insured coverage. These rules also apply regardless of any contestability period of the plan or issuer.
PHS Act section 2712 adds a new advance notice requirement when coverage is rescinded where still permissible. Specifically, the second sentence in section 2712 provides that coverage may not be cancelled unless prior notice is provided, and then only as permitted under PHS Act sections 2702(c) and 2742(b). Under these interim final regulations, even if prior notice is provided, rescission is only permitted in cases of fraud or an intentional misrepresentation of a material fact as permitted under the cited provisions.
These 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group health insurance coverage, must provide at least 30 days advance notice to an individual before coverage may be rescinded. The notice must be provided regardless of whether the rescission is of group or individual coverage; or whether, in the case of group coverage, the coverage is insured or self-insured, or the rescission applies to an entire group or only to an individual within the group.
USE OF DATA
This is a third party disclosure requirement required under PHS Act 2712. The rescission notice will be used by health plans to provide advance notice to certain individuals that their coverage may be rescinded. Individuals whose coverage is about to be rescinded may need to arrange for other coverage, make decisions about whether they wish to appeal the plan's or issuer's decision to rescind their coverage, or make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 immediately. The affected individuals are those who are at risk of rescission on their health insurance coverage. Individuals receiving the disclosure may make an informed decision on these matters rather than being caught off-guard.
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.
EFFORTS TO IDENTIFY DUPLICATION
We have attempted to eliminate duplication within the agency wherever possible. The provision of the notice by either the plan or the issuer satisfies the obligation for both parties.
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.
CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES
Not applicable.
SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Not applicable.
CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS
An interim final rule was published in the Federal Register on June 28, 2010 (75 FR 37184), and offered a 60-day comment prior to its effective date.
In response to our 60-day Federal Register notice (June 27, 2013, at 78 FR 38807), soliciting comments on the renewal of this information collection, no comments were received.
EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.
ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Generally, tax returns and tax return information are confidential as required by 26 USC 6103.
JUSTIFICATION OF SENSITIVE QUESTIONS
No personally identifiable information (PII) is collected.
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 rescinded. 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.
The Department of the Treasury shares the hour burden of this information collection equally with the Department of Labor; therefore the hour burden allocated to the Department of the Treasury is approximately 25 hours.
ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
The Department estimates that the cost burden associated with distributing the 1,600 notices will be approximately $800. The Department of the Treasury shares the cost burden of this information collection equally with the Department of Labor; therefore, the cost burden allocated to Treasury is $400. Our notice dated June 27, 2013, (78 FR 38807), requested public comments on estimates of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital, start-up costs and costs of operation, maintenance, and purchase of services to provide information. We did not receive any responses from taxpayers.
ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
Not applicable.
REASONS FOR CHANGE IN BURDEN
There are no changes to the paperwork burden previously approved by OMB. This submission is for renewal purposes only.
PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not applicable.
REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
We believe that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the regulations sunset as of the expiration date. Taxpayers are not likely to be aware that the Service intends to request renewal of the OMB approval and obtain a new expiration date before the old one expires.
EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB FORM 83-I
Not applicable.
Note: The following paragraph applies to all of the collections of information in this submission:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
| File Type | application/msword |
| Author | J11FB |
| Last Modified By | Wolfgang, Dawn |
| File Modified | 2014-02-27 |
| File Created | 2014-02-27 |