CMS-10465 - MEC - 30-Day Supporting Statement - 06-11-16 Clean

Supporting Statement – Part A
Minimum Essential Coverage
(CMS-10465)
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 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 1501 of the Affordable Care Act adds section 5000A to the Internal Revenue Code
(IRC), which requires that individuals maintain minimum essential coverage, qualify for an
exemption, or make a shared responsibility payment with their federal income tax return.
IRC section 5000A(f) designates certain types of coverage as minimum essential coverage.
In addition, IRC section 5000A(f)(1)(E) directs the Secretary of Health and Human Services
(HHS), in coordination with the Secretary of the Treasury, to recognize other health benefits
coverage as minimum essential coverage for purposes of their enrollees satisfying the
minimum coverage requirement. The final rule titled “Patient Protection and Affordable
Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum
Essential Coverage Provisions” published July 1, 2013 (78 FR 39494) designates certain
types of existing coverages as minimum essential coverage. Other coverages, not statutorily
designated and not designated as minimum essential coverage in regulation, may be
recognized as minimum essential coverage if certain substantive and procedural
requirements are met.
B. Justification
1.

Need and Legal Basis
The final rule specifically designates certain types of coverage that have not been designated
in the statute, as minimum essential coverage. In addition, the final rule outlines a process
by which other types of coverage can seek to be recognized as minimum essential coverage.
To be recognized as minimum essential coverage, the coverage must offer substantially the
same consumer protections as those enumerated in the Title I of Affordable Care Act
relating to non-grandfathered, individual health insurance coverage to ensure consumers are
receiving adequate coverage.
The final rule requires sponsors of other coverage that seek to have such coverage
recognized as minimum essential coverage to adhere to certain procedures. They will have
to submit to HHS electronically the following information: (1) name of the organization
sponsoring the plan; (2) name and title of the individual who is authorized to make, and
makes, this certification on behalf of the organization; (3) address of the individual named
above; (4) phone number of the individual named above; (5) number of enrollees; (6)
eligibility criteria; (7) cost sharing requirements, including deductible and out-of-pocket
maximum; (8) essential health benefits covered; and (9) a certification that the plan
substantially complies with the provisions of Title I of the Affordable Care Act applicable to
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non-grandfathered individual health insurance coverage and any plan documentation or
other information that demonstrate that the coverage sponsored by the organization
substantially complies with these provisions.
The final rule also requires that sponsors whose health coverage are recognized as minimum
essential coverage will have to provide a notice to enrollees informing them that the plan has
been designated minimum essential coverage for the purposes of the individual shared
responsibility provision of the Internal Revenue Code. The notice requirement may be
satisfied by inserting a statement into existing plan documents. Plan documents are usually
reviewed and updated annually before a new plan year begins. Sponsors may insert the
statement in their plan documents at that time at minimal cost. Once the notice is included
in plan documents in the first year, no additional cost will be incurred in future years.
Therefore this notice is not subject to the Paperwork Reduction Act of 1995.
2.

Information Users
CMS will need the information in this collection to determine whether the plan sponsored by
the requesting sponsor may be recognized as minimum essential coverage. CMS will
maintain a public list of the types of coverage that have submitted this information and have
been determined by the Secretary to meet the requirements to be recognized as minimum
essential coverage. Consumers will also need to know that the types of coverage they are
enrolled in are recognized as minimum essential coverage.

3.

Use of Information Technology
Requesting sponsors are expected to submit the information to CMS electronically.

4.

Duplication of Efforts
This is the first time such information collection requests (ICRs) and disclosures have been
required, so there is no duplication of efforts.

5.

Small Businesses
Small businesses are not affected by this collection.

6.

Less Frequent Collection
This information will be provided to CMS at the time of the initial request and if there are
any changes to the coverages at a later date. If sponsors do not submit this information,
CMS will not be able to determine whether these types of coverage may be recognized as
minimum essential coverage. In addition, if consumers are not provided with a notice of
minimum essential coverage status, they would not be aware that the types of coverage in
which they are enrolled are recognized as minimum essential coverage.

7.

Special Circumstances
There are no special circumstances.

8.

Federal Register/Outside Consultation
A Federal Register notice was published on March 11, 2016 (81 FR 12904), providing the
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public with a 60-day period to submit written comments on the ICRs. No comments were
received.
9.

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

10. Confidentiality
CMS will protect privacy of the information provided to the extent provided by law.
11. Sensitive Questions
These ICRs involve no sensitive questions.
12. Burden Estimates (Hours & Wages)
Organizations that currently provide other types of health coverage that are not designated by
statute or regulation as minimum essential coverage may submit a request to CMS that their
coverage be recognized as minimum essential coverage. Organizations that make substantial
changes to health coverage previously recognized as minimum essential coverage must also
reapply for continued recognition of their coverage. Sponsors will have to electronically
submit to CMS information regarding their plans and certify that their plans meet
substantially all of the requirements in the Title I of Affordable Care Act applicable to nongrandfathered, individual health insurance coverage. We anticipate that, on average, 10
sponsors will submit such a request each year. To derive average costs, we used data from
the U.S. Bureau of Labor Statistics’ May 2015 National Occupational Employment and
Wage Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this
regard, the following table presents the mean hourly wage, the cost of fringe benefits
(calculated at 100 percent of salary), and the adjusted hourly wage.
The burden associated with this certification includes the time needed to collect and input
the necessary plan information and to retain a copy for recordkeeping by clerical staff and for
a manager and legal counsel to review it and for a senior executive to review and sign it. The
certification and attachments will be submitted to CMS electronically at minimal cost. We
estimate that it will take a combined total of 5.25 hours (4 hours for clerical staff at an hourly
cost of $33.18, 0.5 hours for a manager at an hourly cost of $109.76, 0.5 hours for legal
counsel at an hourly cost of $128.34 and 0.25 hours for a senior executive at an hourly cost
of $173.76) to prepare and submit the information and certification to CMS and to retain a
copy for recordkeeping purposes. The total cost for one sponsor is estimated to be
approximately $295.21. The sponsor will need to submit this certification to CMS only once
and will need to resubmit it only if there is any change in coverage. Therefore, the total
burden for 10 sponsors will be 53 hours, with an equivalent cost of approximately$2,952.

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Table 12.1 Estimated Burden Hours for Minimum Essential Coverage Certification

Type of Form

Number of
Respondents

Number
of Reports

Certification

10

1

Total
Estimated
Burden Hours
53

Burden Cost
Per
Respondent
$2,952

13. Capital Costs
Sponsors are not expected to incur capital costs to fulfill these requirements.
14. Cost to Federal Government
CMS staff is expected to review the information submitted by requesting sponsors. We
anticipate that a reviewer will need 3 hours to review each submission.
Table 14.1 Estimated Cost to Federal Government
Type of
Federal
Employee
Support

Total Burden
Hours per
Reviewer

Total
Reviewers

Hourly Wage Rate
(GS 14 equivalent)
– (includes fringe)

Total Federal
Government
Costs

30 hours

1

$72

$ 2,160

Review of
MEC
Application
Materials

Salaries are based on a 14 Grade/Step 1 in the Washington DC area with a benefit allowance
for a total annual salary of $150,000.
15. Changes to Burden
There are no changes in burden hours. However, use of updated labor costs have resulted in
an increase in equivalent costs from $2,198 to $2,952.
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.

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