CMS-10571 Supporting Statement -Limited Wraparound Coverage Reporting

Supporting Statement – Part A
Limited Wraparound Coverage Reporting
(CMS- 10571/OMB control number 0938-NEW)

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.
The Department of Treasury, the Department of Labor and the Department of Health and
Human Services (the Departments) published final regulations on March 18, 2015 (80
FR13995), amending the regulations regarding excepted benefits under the Employee
Retirement Income Security Act of 1974, the Internal Revenue Code, and the Public Health
Service Act to specify requirements for limited wraparound coverage to qualify as an
excepted benefit. Excepted benefits are generally exempt from the requirements that were
added to those laws by the Health Insurance Portability and Accountability Act and the
Affordable Care Act. The final regulations provide plan sponsors with two options to offer
limited wraparound coverage to certain individuals. Under the first option, a plan sponsor
could offer limited benefits provided through a group health plan that wraps around eligible
individual health insurance to employees who are not full-time employees (and their
dependents), or who are retirees (and their dependents). For this purpose, full-time employees
are employees who are reasonably expected to work at least an average of 30 hours per week.
Under the second option, the limited wraparound coverage that satisfies the requirements
outlined in the regulations must be approved by the Office of Personnel Management (OPM)
and be offered in conjunction with Multi-State Plan coverage authorized under section 1334
of the Affordable Care Act. Under the first option, the limited benefits would also be
permitted to wrap around the Basic Health Program (BHP) authorized under section 1331 of
the Affordable Care Act.
B. Justification
1.

Need and Legal Basis
The final regulations include requirements that limited wraparound coverage must satisfy in
order to qualify as excepted benefits. One of them is a reporting requirement, for group health
plans and group health insurance issuers, as well as group health plan sponsors.
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INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: This information has not
been publicly disclosed and may be privileged and confidential. It is for internal government use only and must not be
disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclosure
may result in prosecution to the fullest extent of the law.

A self-insured group health plan, or a health insurance issuer offering or proposing to offer
Multi-State Plan wraparound coverage, is required to report to OPM information reasonably
required to determine whether the plan or issuer qualifies to offer such coverage or complies
with the applicable requirements. In addition, the plan sponsor of any group health plan
offering any type of limited wraparound coverage is required to report to the Department of
Health and Human Services (HHS), in a form and manner specified in guidance by the
Secretary of HHS.
Limited wraparound coverage is permitted under a pilot program for a limited time. The final
rules specify that wraparound coverage can be offered as excepted benefits if the coverage is
first offered no earlier than January 1, 2016 and no later than December 31, 2018. The end
date is the later of: (1) the date that is three years after the date wraparound coverage is
first offered; or (2) the date on which the last collective bargaining agreement relating to the
plan terminates after the date wraparound coverage is first offered (determined without regard
to any extension agreed to after the date the wraparound coverage is first offered).
2.

Information Users
Group health plans offering limited wraparound programs will complete the reporting form
and submit it to HHS. This is a one-time submission. The plan sponsor must file the form
within the later of 60 days after final publication of the form or 60 days after the first day of
the first plan year that limited wraparound coverage is first offered.
The information provided in the reports will be reviewed by HHS to ensure that the limited
wraparound coverage being offered satisfy the requirements to qualify as excepted benefits.

3.

Use of Information Technology
Respondents are expected to submit the reports to CMS electronically.

4.

Duplication of Efforts
This is the first time such reports have been required, so there is no duplication of efforts.

5.

Small Businesses
Small businesses that offer limited wraparound coverage will be subject to the reporting
requirements.

2
INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: This information has not
been publicly disclosed and may be privileged and confidential. It is for internal government use only and must not be
disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclosure
may result in prosecution to the fullest extent of the law.

6.

Less Frequent Collection
Reports will be submitted on a one-time basis. Without the information submitted in the
reports, HHS will not be able to monitor usage and impact during the pilot program and
ensure that limited wraparound coverage is allowing plan sponsors to provide comparable
benefits to what is being offered in their group health plans.

7.

Special Circumstances
There are no special circumstances.

8.

Federal Register/Outside Consultation
A notice was published in the Federal Register on December 15, 2017 (82 FR 59622),
providing the public with a 60-day period to submit written comments on these information
collection requirements (ICRs). No additional outside consultation was sought.
We received 13 comments that addressed the ICRs, the impact of the limited wraparound pilot
program, and its extension, as summarized in Appendix I. Three commenters discussed the
reporting form. The model form was revised to address the specific comments on the form
and the instructions. The revisions are listed in Appendix II. The Departments are reviewing
the comments on the impact of the limited wraparound pilot program and its extension.

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)
As stated in the final regulations, the Departments do not expect many plans to offer limited
wraparound coverage. In the absence of any data, we assume that at least 8 plan sponsors will
provide limited wraparound coverage under the pilot program and will, therefore, be subject
to this reporting requirement.
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INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: This information has not
been publicly disclosed and may be privileged and confidential. It is for internal government use only and must not be
disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclosure
may result in prosecution to the fullest extent of the law.

To derive wage estimates, we generally used data from the Bureau of Labor Statistics to
derive average labor costs (including a 100 percent increase for fringe benefits and overhead)
for estimating the burden associated with the ICRs. 1 Table 1 below presents the mean hourly
wage, the cost of fringe benefits and overhead, and the adjusted hourly wage. As indicated,
employee hourly wage estimates have been adjusted by a factor of 100 percent. This is
necessarily a rough adjustment, both because fringe benefits and overhead costs vary
significantly across employers, and because methods of estimating these costs vary widely
across studies. Nonetheless, there is no practical alternative, and we believe that doubling the
hourly wage to estimate total cost is a reasonably accurate estimation method.
Table 1: Adjusted Hourly Wages Used in Burden Estimates

Occupation Title
Compensation and
Benefits Manager
Top Executive
Lawyer
Human Resource
Specialist

Occupational
Code

Mean Hourly
Wage ($/hr.)

11-3111

$61.01

Fringe Benefits
and Overhead
($/hr.)
$61.01

11-1000
23-1011
13-1071

$61.03
$64.17
$31.20

$61.03
$64.17
$31.20

Adjusted Hourly
Wage ($/hr.)
$122.02
$122.06
$128.34
$62.40

It is assumed that a human resource specialist for each plan sponsor will gather and enter the
necessary data, send the report electronically to HHS and retain a copy for recordkeeping, a
manager and legal counsel will review it, and a senior executive will review and sign the
certification. It is estimated that an organization will need approximately 3 hours to complete
and submit the report and maintain records: 2 hours by a human resource specialist at a cost of
$62.40 per hour, 30 minutes for a benefits manager at a cost of $122.02 per hour, 15 minutes
for legal counsel at a cost of $128.34 per hour, and 15 minutes for a top executive at a cost of
$122.06 per hour. The report may be submitted electronically to HHS at minimal cost.
Therefore, the total one-time cost burden for preparing and submitting the report is estimated
to be approximately $218 for each respondent. The total burden for 8 respondents in estimated
to be 24 hours with an equivalent cost burden of approximately $1,743.

1 See May 2016 Bureau of Labor Statistics, Occupational Employment Statistics, National Occupational Employment
and Wage Estimates at https://www.bls.gov/oes/current/oes_nat.htm. For State Government Employees see NAICS
999200 - State Government, excluding schools and hospitals (OES Designation)
https://www.bls.gov/oes/current/naics4_999200.htm.
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INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: This information has not
been publicly disclosed and may be privileged and confidential. It is for internal government use only and must not be
disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclosure
may result in prosecution to the fullest extent of the law.

Table 2. Estimated Burden for Report

Notice
Report

Number of
respondents
8

Number of
responses per
respondent
1

Estimated
Burden
Hours per
Respondent
3

Total
Estimated
Burden
Hours
24

Estimated
Burden Cost
Per
Respondent
$217.91

Total
Estimated
Cost
$1,743.24

13. Capital Costs
Respondents are not expected to incur capital costs to fulfill these requirements.
14. Cost to Federal Government
CMS staff is expected to review the reports. We anticipate that a reviewer will need 1 hour to
review each submission.
Table 3. Estimated Cost to Federal Government

Type of Federal
Employee Support

Total Burden
Hours per Reviewer

Total
Reviewers

Hourly Cost
(including fringe
benefits and
overhead)

Report Review

8

1

$90.84

Total
Federal
Government
Costs
$727

Salaries are based on a 13 Grade/Step 1 in the Washington DC area and hourly cost includes
benefits and overhead estimated to be 100 percent of salary.
15. Changes to Burden
This is a new information collection, so there are no changes to burden.
16. Publication/Tabulation Dates
There are no plans to publish the outcome of the data collection.
17. Expiration Date
The expiration date will be displayed on the first page of each instrument (top, right-hand
corner).
5
INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: This information has not
been publicly disclosed and may be privileged and confidential. It is for internal government use only and must not be
disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclosure
may result in prosecution to the fullest extent of the law.