CMS-10527 Supporting Statement 30d_01-14-15 (2)

Supporting Statement – Part A
Annual Eligibility Redetermination, Product Discontinuation
and Renewal Notices (CMS-10527)
A. Background
The Patient Protection and Affordable Care Act, Pub. L. 111-148, was enacted on March 23,
2010; and 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.
Section 1411(f)(1)(B) of the Affordable Care Act directs the Secretary of Health and Human
Services (the Secretary) to establish procedures to redetermine the eligibility of individuals on
a periodic basis in appropriate circumstances. Section 1321(a) of the Affordable Care Act
provides authority for the Secretary to establish standards and regulations to implement the
statutory requirements related to Exchanges (also referred to as Health Insurance
Marketplaces or Marketplaces), qualified health plans (QHPs) and other components of title I
of the Affordable Care Act. Under section 2703 of the PHS Act, as added by the Affordable
Care Act, and sections 2712 and 2741 of the PHS Act, enacted by the Health Insurance
Portability and Accountability Act of 1996, health insurance issuers in the group and
individual markets must guarantee the renewability of coverage unless an exception applies.
B. Justification
1 . Need and Legal Basis
The final rule “Patient Protection and Affordable Care Act; Annual Eligibility
Redeterminations for Exchange Participation and Insurance Affordability Programs; Health
Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to
Exchanges” (79 FR 52994), provides that a Marketplace may choose to conduct the annual
redetermination process for a plan year (1) in accordance with the existing procedures
described in 45 CFR 155.335; (2) in accordance with procedures described in guidance issued
by the Secretary for the coverage year; or (3) using an alternative proposed by the
Marketplace and approved by the Secretary.
The guidance document “Guidance on Annual Redeterminations for Coverage for 2015” 1
contains the procedures that the Secretary is specifying for the coverage year, as noted in (2)
1

Guidance on Annual Redeterminations for Coverage for 2015 (June 26, 2014). Available at
http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Guidance-on-annual-redet-option2015-6-26-14.pdf

1

above. These procedures will be adopted by the Federally-facilitated Marketplace. Under this
option, the Marketplace will provide three notices. These notices may be consolidated.
The final rule also amends the requirements for product renewal and re-enrollment (or
discontinuance) notices to be sent by QHP issuers in the individual market Marketplaces and
specifies content for these notices. The accompanying bulletin “Form and Manner of Notices
When Discontinuing or Renewing a Product in the Group or Individual Market” 2 provides
standard notices to be sent by issuers of individual market QHPs and issuers in the individual
market. The guidance takes into account comments we received in response to initial drafts of
standard notices that were contained in previous CMS bulletins published on March 14, 2014
and June 26, 2014. 3
States that are enforcing the Affordable Care Act 4 may develop their own standard notices for
product discontinuances, renewals, or both, provided the State-developed notices are at least
as protective as the Federal standard notices. In such cases, issuers of individual market
coverage: (1) must provide notices in the form of the State’s standard discontinuance and
renewal notices, if required by the State, (2) may provide notices in the form of either the
State’s standard discontinuance and renewal notices, or the Federal standard notices, as
permitted by the State.
Issuers in the small group market may use the draft Federal standard small group notices
released in the June 26, 2014 bulletin, or any forms of the notice otherwise permitted by
applicable laws and regulations. Small group market issuers not using the form and manner
of the draft Federal standard notices released in the June 26, 2014 bulletin to include the
content described in the bulletin “Form and Manner of Notices When Discontinuing or
Renewing a Product in the Group or Individual Market”.
2.

Information Users
Consumers will need the information in these notices in order to understand the annual
renewal process and the Marketplace redetermination process, as well as to make appropriate
decisions regarding their coverage for the next plan year.

2

Available at http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Renewal-Notices-9-2-14FINAL.pdf
3
Draft Notices When Discontinuing or Renewing a Product in the Group or Individual Market (March 14, 2014).
Available at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/draft-discontinuancerenewal-notices-03-14-14.pdf. Draft Standard Notices When Discontinuing or Renewing a Product in the Small Group
or Individual Market (June 26, 2014). Available at: http://www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/Bulletin-on-Renewal-and-Discontinuation-Notices.pdf.
4
Currently, Alabama, Missouri, Oklahoma, Texas, and Wyoming have informed HHS that they are not enforcing the
Affordable Care Act in their jurisdictions. These are considered “non-enforcing” States. All other States are currently
considered by HHS to be enforcing the Affordable Care Act.

2

3.

Use of Information Technology
Marketplaces and issuers may provide notices electronically.

4.

Duplication of Efforts
Marketplaces that opt to use an alternative set of redetermination procedures to what is
described in existing 45 CFR 155.335 will send the notices in this collection instead of those
in current requirements and may consolidate notices. So there would be no duplication.
Issuers in the individual and small group markets currently have renewal and discontinuation
notice requirements. The notices in this collection would be used to meet those requirements
so there would be no duplication of efforts.

5.

Small Businesses
These information collection requirements (ICRs) do not impact small businesses or entities.

6.

Less Frequent Collection
If these notices are not sent annually before the open enrollment period, consumers will not
have the necessary information to make their decisions regarding health insurance coverage
for the upcoming plan year.

7.

Special Circumstances
There are no special circumstances.

8.

Federal Register/Outside Consultation
A Federal Register notice was published on November 4, 2014 (79 FR 65400), providing the
public with a 60-day period to submit written comments on these ICRs. No comments were
received.

9.

Payments/Gifts to Respondents
No payments or gifts are associated with these ICRs.

10. Confidentiality
Privacy of the information provided will be protected to the extent provided by law.

11. Sensitive Questions
3

These ICRs involve no sensitive questions.
12. Burden Estimates (Hours & Wages)
We generally used data from the Bureau of Labor Statistics to derive average labor costs
(including fringe benefits) for estimating the burden associated with the ICRs.
Annual Redetermination Notices
The final rule provides that a Marketplace has three options when conducting the annual
redetermination process for a plan year. The first option is to use existing procedures. The
second option is to use the procedures described in the guidance document “Guidance on
Annual Redeterminations for Coverage for 2015”, and adopted by the Federally-facilitated
Marketplace. Under this option, the Marketplace will provide three notices which may be
consolidated. The third option for a State-based Marketplace is to utilize alternative
procedures approved by the Secretary based on a showing by the Marketplace that such
procedures meet specified criteria. We anticipate that fewer than 10 State-based
Marketplaces will opt for the second and third options. Under 5 CFR 1320.3(c)(4), ICRs
associated with these two options are not subject to the PRA as they would affect fewer than
10 entities in a 12-month period.
Renewal Notices
Health insurance issuers that are renewing coverage under a product in the small group or
individual market, including the Marketplaces, are required to send a notice to enrollees.
The guidance document “Form and Manner of Notices When Discontinuing or Renewing a
Product in the Group or Individual Market” includes the following standard renewal notices
to be sent by issuers of individual market QHPs and issuers in the individual market:
• Renewal notice for the individual market where coverage is being renewed outside
the Marketplace
• Renewal notice for the individual market where coverage is being renewed in a
QHP offered under the same product through the Marketplace
Issuers in the small group market may use the draft Federal standard small group notices
released in the June 26, 2014 bulletin, or any forms of the notice otherwise permitted by
applicable laws and regulations. Small group market issuers not using the form and manner
of the draft Federal standard notices released in the June 26, 2014 bulletin to include the
content described in the accompanying bulletin accompanying bulletin “Form and Manner of
Notices When Discontinuing or Renewing a Product in the Group or Individual Market”.
States that are enforcing the Affordable Care Act may develop their own standard notices.
However, we anticipate that fewer than 10 States will opt for this alternative. Under 5 CFR
1320.3(c)(4), this requirement is not subject to the PRA as it would affect fewer than 10
4

entities in a 12-month period.
We estimate that there are 2,641 issuers in the individual market, including 575 QHP issuers,
and 1,288 issuers in the small group market that will need to revise existing renewal notices to
comply with the requirements in the guidance, with a total of 2,945 issuers in both markets.
Since there are existing requirements for issuers to send renewal notices, we only estimate the
burden to revise and automate the notices.
For issuers in the individual market outside the Marketplace and small group market, we
estimate that it will require 3 hours of clerical labor (at a cost of $33.67 per hour) to prepare
the notice using the Federal standard notice (or a standard notice provided by their State) and
1 hour for a senior manager (at a cost of $75.34 per hour) to review the notice. We also
estimate that it will take a computer programmer 16 hours (at a cost of $52.53 per hour) to
write and test a program to automate the notices. The total annual burden for each issuer to
develop the notice will be 20 hours with an equivalent cost of approximately $1,017. For all
2,641 issuers in the individual market, the total annual burden will be 52,820 hours with an
equivalent cost of approximately $2.69 million. For all 1,288 issuers in the small group
market, the total annual burden will be 25,760 hours with an equivalent cost of $1.31 million.
Table 12.1 Estimated Annualized Burden for Renewal Notices for issuers outside the
Marketplace
Respondent

Issuer in
Individual
Market
Issuer in
Small
Group
Market
Total

Number of
respondents

Number of
notices per
respondent

Burden
per notice
(Hours)

Labor cost
per notice

2,641

1

20

1,288

1

20

2,945

Total cost for
all respondents

$1,016.81

Total burden
for all
respondents
(Hours)
52,820

$1,016.81

25,760

$1,309,646.77

78,580

$3,995,032.74

$2,685,385.97

Individual Market QHP issuers will need to include some additional information in their
notices and therefore will incur a higher burden. We estimate that it will require 3 hours of
clerical labor (at a cost of $33.67 per hour) to prepare the notice using the Federal standard
notice (or a standard notice provided by their State) and 1 hour for a senior manager (at a cost
of $75.34 per hour) to review the notice. We also estimate that it will take a computer
programmer 20 hours (at a cost of $52.53 per hour) to write and test a program to automate
the notices. The total annual burden for each issuer to develop the notice will be 24 hours
with an equivalent cost of approximately $1,227. For all 575 QHP issuers, the total annual
5

burden will be 13,800 hours with an equivalent cost of approximately $705,479.
Table 12.2 Estimated Annualized Burden for Renewal Notices for Individual Market QHP
Issuers
Number of Number of
Burden
respondents notices per per notice
responden
(Hours)
t
575
1
24

Labor cost
per notice

$1,226.92

Total burden
for all
respondents
(Hours)
13,800

Total cost for all
respondents

$705,479.29

Discontinuation (or re-enrollment) Notices
A health insurance issuer that is discontinuing coverage under a product in the small group or
individual market, or a QHP issuer that is discontinuing a product offered through the
individual market Marketplace and automatically enrolling an enrollee in a QHP under a
different product offered by the same QHP issuer through the Marketplace, is required to send
a notice to enrollees.
The guidance document “Form and Manner of Notices When Discontinuing or Renewing a
Product in the Group or Individual Market” includes standard product discontinuance notices
to be sent by issuers in the individual market. Each of the draft discontinuance notices in the
June 26, 2014 bulletin has been replaced by two simplified notices. Issuers will send one of
two types of discontinuation notices depending on whether the issuer is automatically
enrolling an enrollee in a plan under another product offered by the issuer. Issuers will send
the following notices as appropriate:
• Discontinuation notice for the individual market outside the Marketplace and the
issuer is automatically enrolling the enrollee in a new plan
• Notice for the individual market where coverage was in a QHP offered through the
Marketplace and the issuer is automatically enrolling the enrollee in a new product
• Discontinuation notice for the individual market outside the Marketplace and the
issuer is not automatically enrolling the enrollee in a new plan
• Discontinuation notice for the individual market where coverage being
discontinued was in a QHP offered through the Marketplace and the issuer is not
automatically enrolling the enrollee in a new plan
Issuers in the small group market may use the draft Federal standard small group notices
released in the June 26, 2014 bulletin, or any forms of the notice otherwise permitted by
applicable laws and regulations. Small group market issuers not using the form and manner
of the draft Federal standard notices released in the June 26, 2014 bulletin to include the
content described in the accompanying bulletin accompanying bulletin “Form and Manner of
Notices When Discontinuing or Renewing a Product in the Group or Individual Market”.
States that are enforcing the Affordable Care Act may develop their own standard notices.
6

However, we anticipate that fewer than 10 states would opt for this alternative. Under 5 CFR
1320.3(c)(4), this requirement is not subject to the PRA as it would affect fewer than 10
entities in a 12-month period.
We estimate that there are 2,641 issuers in the individual market, and 1,288 issuers in the
small group market that will need to revise existing discontinuance notices to comply with the
requirements in the guidance, with a total of 2,945 issuers in both markets. Since there are
existing requirements for issuers to send product discontinuance notices, we only estimate the
burden to revise and automate the notices.
For issuers in the individual market outside the Marketplace, the draft discontinuance notice
in the June 26, 2014 bulletin has been replaced by two simplified notices, leading to lower
burden per notice and a small increase in overall burden. We estimate that, for the notice
when the issuer is automatically reenrolling the enrollee in another plan, it will require 2
hours of clerical labor (at a cost of $33.67 per hour) to prepare the notice using the Federal
standard notice (or a standard notice provided by their State) and 1 hour for a senior manager
(at a cost of $75.34 per hour) to review the notice template. We also estimate that it will take
a computer programmer 5 hours (at a cost of $52.53 per hour) to write and test a program to
automate the notices. The total annual burden for each issuer to prepare the template will be 8
hours with an equivalent cost of approximately $405. For all 2,641 issuers in the individual
market, the total annual burden will be 21,128 hours with an equivalent cost of approximately
$1.1 million.
We estimate that, for the notice when the issuer is not automatically reenrolling the enrollee
in another plan, it will require 1 hour of clerical labor (at a cost of $33.67 per hour) to prepare
the notice using the Federal standard notice (or a standard notice provided by their State) and
0.5 hours for a senior manager (at a cost of $75.34 per hour) to review the notice template.
We also estimate that it will take a computer programmer 3 hours (at a cost of $52.53 per
hour) to write and test a program to automate the notices. The total annual burden for each
issuer to prepare the template will be 4.5 hours with an equivalent cost of approximately
$229. For all 2,641 issuers in the individual market, the total annual burden will be 11,885
hours with an equivalent cost of approximately $604,594.
For issuers in the small group market, we estimate that it will require 3 hours of clerical labor
(at a cost of $33.67 per hour) to prepare the notice using the Federal standard notice (or any
forms of the notice otherwise permitted by applicable laws and regulations) and 1 hour for a
senior manager (at a cost of $75.34 per hour) to review the notice template. We also estimate
that it will take a computer programmer 8 hours (at a cost of $52.53 per hour) to write and test
a program to automate the notices. The total annual burden for each issuer to prepare the
template will be 12 hours with an equivalent cost of approximately $597. For all 1,288
issuers in the small group market, the total annual burden will be 15,456 hours with an
equivalent cost of approximately $768,393.

7

Table 12.3 Estimated Annualized Burden for Discontinuance Notices for Issuers Outside the
Marketplace
Respondent

Type of Notice

Issuer in
Individual
Market

Discontinuance
notice with
re-enrollment

2,641

Burden Cost per Total burden Total Cost for
per
notice
for all
all
notice
respondents respondents
(Hours)
1
8 $405.32
21,128 $1,070,460.68

Issuer in
Individual
Market

Discontinuance
notice without
re-enrollment

2,641

1

4.5

$228.93

11,885

$604,594,23

Issuer in
Small Group
Market

Discontinuance
Notice

1,288

1

12

$596.58

15,456

$768,393.11

48,469

$2,443,448.02

Total

Number of
respondents

Number of
notices per
respondent

2,945

Individual market QHP issuers, including issuers that are discontinuing a product offered through
the Marketplace and automatically enrolling an enrollee in a QHP under a different product
offered by the same QHP issuer through the Marketplace, will need to include some additional
information in their notices and therefore will incur a higher burden. We estimate that, for the
notice when the issuer is automatically reenrolling the enrollee in another plan, it will require 2
hours of clerical labor (at a cost of $33.67 per hour) to prepare the notice using the Federal
standard notice (or a standard notice provided by their State) and 1 hour for a senior manager (at a
cost of $75.34 per hour) to review the notice template. We also estimate that it will take a
computer programmer 6 hours (at a cost of $52.53 per hour) to write and test a program to
automate the notices. The total annual burden for each issuer to prepare the template will be 9
hours with an equivalent cost of approximately $458. For all 575 QHP issuers, the total annual
burden will be 5,175 hours with an equivalent cost of approximately $263,265.
We estimate that, for the notice when the issuer is not automatically reenrolling the enrollee in
another plan, it will require 1 hour of clerical labor (at a cost of $33.67 per hour) to prepare the
notice using the Federal standard notice (or a standard notice provided by their State) and 0.5
hours for a senior manager (at a cost of $75.34 per hour) to review the notice template. We also
estimate that it will take a computer programmer 4 hours (at a cost of $52.53 per hour) to write
and test a program to automate the notices. The total annual burden for each issuer to prepare the
template will be 5.5 hours with an equivalent cost of approximately $281. For all 575 QHP
issuers, the total annual burden will be 3,162.5 hours with an equivalent cost of approximately
$161,836.
Table 12.4 Estimated Annualized Burden for Discontinuance (or Re-enrollment) Notices for
8

Individual Market QHP Issuers
Type of Notice

Number of
respondent
s

Discontinuanc
e notice with
re-enrollment
Discontinuanc
e notice
without reenrollment
Total

575

Number of
Burden
notices per per notice
responden
(Hours)
t
1
9

575

1

5.5

Labor cost
per notice

Total cost for all
respondents

$457.85

Total burden
for all
respondents
(Hours)
5,175

$282.45

3,162.5

$161,836.48

8,337.5

$425,101.67

575

$263,265.19

13. Capital Costs
Marketplaces and health insurance issuers are expected to maintain copies of notices on file.
The retention of copies would fall under normal record retention practices as part of
customary and usual business and therefore would have a marginal annual cost.
14. Cost to Federal Government
There are no costs to the Federal government.
15. Changes to Burden
There are no changes in burden.
16. Publication/Tabulation Dates
There are no publication or tabulation dates associated with these ICRs.
17. Expiration Date
There is no expiration date for this collection requirement.

9

ATTACHMENTS:
FEDERAL STANDARD RENEWAL AND DISCONTINUATION NOTICES

10