CMS-10527 Supporting Statement OMB

Supporting Statement – Part A
Annual Eligibility Redetermination, Product Discontinuation and
Renewal Notices (CMS-10527/0938-1254)
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 former section 2712 and section 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 Eligibility Redeterminations and Re-enrollment for
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Marketplace Coverage for 2017” contains the procedures that the Secretary is specifying for the
coverage year, as noted in (2) above. These procedures will be adopted by the Federally-facilitated
Marketplace.
1

Guidance on Annual Eligibility Redeterminations and Re-enrollment for Marketplace Coverage for 2017 (May 10, 2016).
Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ARR-2017-Guidance-051016-508.pdf.

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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 “Updated Federal Standard Renewal and Product Discontinuation
Notices” 2 provides standard notices to be sent by issuers of individual market QHPs and issuers in the
individual market.
States that are enforcing the guaranteed renewability provisions under the Affordable Care Act 3 may
develop their own standard notices for product discontinuances, renewals, or both, provided the Statedeveloped notices are at least as protective as the Federal standard notices.
Issuers in the small group market may use the draft Federal standard small group notices released in
the June 26, 2014 bulletin 4, 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 are expected to include the content described in the
September 2, 2014 bulletin 5 “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.
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.

2

Available at https://www.cms.gov/cciio/
Currently, 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.
4
Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-Updated-Federal-StandardRenewal-and-Product-Discontinuation-Notices-042116.pdf
5
Available at https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/renewal-notices-9-3-14-final.pdf
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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 April 21, 2016 (81 FR 25406), providing the public with a
60-day period to submit written comments on these ICRs. Nine comments were received from issuers
and other organizations regarding language and data points each would like to see included or removed
from the final notices. A number of suggestions resulted in changes being made to the notices (See
Appendix A). The information collection requirements are not effective until they have been approved
by the Office of Management and Budget.
There was no additional outside consultation regarding the proposed information collection
requirements.

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
These ICRs involve no sensitive questions.
12. Burden Estimates (Hours & Wages)
To derive average costs, we used data from the Bureau of Labor Statistics’ May 2015 National
Occupational Employment. Hourly wage rates include the costs of fringe benefits (calculated at 100
percent of salary) and the adjusted hourly wage.
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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 Eligibility
Redeterminations and Re-enrollment for Marketplace Coverage for 2017”, and adopted by the
Federally-facilitated Marketplace. 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 plan sponsors or individuals, as
applicable.
The guidance document “Updated Federal Standard Renewal and Product Discontinuation Notices”
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
Each of the standard notices in the September 2, 2014 bulletin has been replaced by simplified forms
designed to make the notices shorter, simpler and easier to understand and navigate, and to enable
consumers to more readily identify critical consumer actions and deadlines, among other
improvements.
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 are expected to include the content described in the
September 2, 2014 bulletin “Form and Manner of Notices When Discontinuing or Renewing a Product
in the Group or Individual Market”.
States that are enforcing the guaranteed renewability provisions of 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 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
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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 $33.84per 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 $112.58 per hour) to review the notice. We also estimate that it will take a
computer programmer 16 hours (at a cost of $81.12 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 $1,512.02. For all 2,641 issuers in the individual market,
the total annual burden will be 52,820 hours with an equivalent cost of approximately $3.99
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 $1.94 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

$1,512.02

Total burden
for all
respondents
(Hours)
52,820

1,288

1

20

$1,512.02

25,760

$1,940,481.76

78,580

$5,940,726.58

2,945

Total cost for
all respondents

$3,993,244.82

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 $33.84 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 $112.58 per hour) to
review the notice. We also estimate that it will take a computer programmer 20 hours (at a cost of
$81.12 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 $1,837.
For all 575 QHP issuers, the total annual burden will be 13,800 hours with an equivalent cost of
approximately $1,055,987.50.

Table 12.2 Estimated Annualized Burden for Renewal Notices for Individual Market QHP Issuers

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Number of
respondents

Number of
notices per
respondent

575

1

Burden
per
notice
(Hours)
24

Labor cost
per notice

$1,836.50

Total burden
for all
respondents
(Hours)
13,800

Total cost for all
respondents

$1,055,987.50

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 September 2, 2014 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 standard discontinuance notices in
the September 2, 2014 bulletin has been replaced by simplified forms designed to make the notices
shorter, simpler and easier to understand and navigate, and to enable consumers to more readily
identify critical consumer actions and deadlines. Issuers in the individual market 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 are expected to include the content described in the
September 2, 2014 bulletin.
States that are enforcing the guaranteed renewability provisions of the Affordable Care Act may
develop their own standard notices. 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
6

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 discontinuance notices in the
September 2, 2014 bulletin have been replaced by simplified notices designed to make the notices
shorter, simpler and easier to understand and navigate, and to enable consumers to more readily
identify critical consumer actions and deadlines with no additional 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 $33.84 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
$112.58 per hour) to review the notice template. We also estimate that it will take a computer
programmer 5 hours (at a cost of $81.12 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 $586. For all 2,641 issuers in the individual market, the total annual burden will be
21,128 hours with an equivalent cost of approximately $1.5 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 $33.84 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 $112.58 per hour) to review the notice template. We also estimate that it will
take a computer programmer 3 hours (at a cost of $81.12 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 $333. For all 2,641 issuers in the individual market, the total
annual burden will be 11,885 hours with an equivalent cost of approximately $880,747.
For issuers in the small group market, we estimate that it will require 3 hours of clerical labor (at a cost
of $33.84 per hour) to prepare the notice using the draft 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 $112.58 per hour) to review the notice template. We also estimate that it will take a computer
programmer 8 hours (at a cost of $81.12 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 $863. 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 $1.1 million.
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

Number of
respondents

Number of
notices per
respondent

Burden Cost per Total burden Total Cost for
per
notice
for all
all
notice
respondents respondents
(Hours)
1
8 $585.86
21,128 $1,547,256.26

2,641

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Issuer in
Individual
Market

Discontinuance
notice without
re-enrollment

2,641

1

4.5

$333.49

11,885

$880,747.09

Issuer in
Small Group
Market

Discontinuance
Notice

1,288

1

12

$863.06

15,456

$1,111,621.2
8

48,469

$3,539,624.63

Total

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 $33.84 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 $112.58 per hour) to review the notice template. We also estimate that it
will take a computer programmer 6 hours (at a cost of $81.12 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 $667. For all 575 QHP issuers, the total
annual burden will be 5,175 hours with an equivalent cost of approximately $383,513.50.
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 $33.84 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 $112.58 per hour) to review the notice template. We
also estimate that it will take a computer programmer 4 hours (at a cost of $81.12 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 $415. For all
575 QHP issuers, the total annual burden will be 3,162.5 hours with an equivalent cost of
approximately $238,401.
Table 12.4 Estimated Annualized Burden for Discontinuance (or Re-enrollment) Notices
for Individual Market QHP Issuers
Type of Notice

Number of
respondents

Number of
notices per
respondent

Burden
per
notice
(Hours)

Discontinuance
notice with reenrollment

575

1

9

8

Labor
cost per
notice

$666.98

Total burden
for all
respondents
(Hours)
5,175

Total cost for
all
respondents

$383,513.50

Discontinuance
notice without
re-enrollment
Total

575

1

5.5

575

$414.61

3,162.5

$238,400.75

8,337.5

$621,914.25

Student Health Insurance Coverage
With respect to notices that are required to be provided for student health insurance coverage in
connection with a renewal or product discontinuation effective after January 1, 2018 (that is, beginning
with notices required to be provided in connection with the 2018-2019 academic year), the issuer’s
requirement to provide the notice to student enrollees and their covered dependents generally will be
considered satisfied if it ensures that another party (e.g., the institution of higher education) provides a
timely and complete notice to the student. We believe that issuers will make arrangements with the
institutions of higher education to notify students and their covered dependents of these changes. Since
institutions of higher education routinely communicate with students about their health coverage
options, it is expected that any additional burden will be negligible.
Transfer of Products to a Related Issuer
In the HHS Notice of Benefit and Payment Parameters for 2018 proposed rule, CMS proposed that a
product would be considered to be the same product under CMS regulations when offered by a
different issuer within the issuer’s controlled group, provided any changes to the product otherwise
meet the standards for uniform modification of coverage. This interpretation considers the product
offered by the acquiring issuer in the controlled group to be the same as the product previously offered
by the current issuer, thus the issuer of the coverage at the time notice must be provided (whether the
current issuer or the acquiring issuer) would be required to provide a renewal notice using the
applicable Federal standard renewal notice. This could result in the burden associated with the
notification requirement being transferred to the acquiring issuer, but is not expected to result in new
burden.
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
Based on CMS’s experience communicating with consumers in the Marketplaces, the guidance
document “Updated Federal Standard Renewal and Product Discontinuation Notices” has made
substantial changes to the renewal and discontinuation notices. The updates are designed to make
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the notices shorter, simpler and easier to understand and navigate, and to enable consumers to more
readily identify critical consumer actions and deadlines. The notices also highlight the individual
shared responsibility provision to encourage individuals to maintain coverage when their coverage
is non-renewed or terminated; explain that their amount of advance payments of the premium tax
credit (APTC) may change and that in some cases consumers may be informed of their actual
monthly payment in their bill in the following coverage year; encourage consumers to report life
changes to the Marketplace; and more clearly describe how consumers can get assistance in nonEnglish languages, consistent with Marketplace notices.
The new notices, while shorter and easier to understand, require the addition of a number of new
content elements; including informing consumers that they may not be able to switch to a
Marketplace plan during the upcoming year regardless of financial changes, clarifying that
estimated premiums are based on current information, an enrollee’s current monthly premium,
specifying deadlines for the first premium payment for the upcoming year, identifying the
enrollee’s broker or agent as a source of assistance, the amount of potential tax penalty under the
individual shared responsibility provision, and that any excess APTC is not owed to the issuer.
Although changes are being made to the renewal and discontinuation notices, the currently
approved ICR provides burden estimates issuers would have incurred to develop notices. It is
believed that the simplifications to the notices will be offset by the addition of new content
elements and therefore no net change is expected in the burden hour estimate.
16. Publication/Tabulation Dates
There are no publication or tabulation dates associated with these ICRs.
17. Expiration Date
The OMB control number and expiration date are displayed on each data collection instrument.

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ATTACHMENTS:
APPENDIX A: 60-DAY COMMENTS AND ACTIONS TAKEN
UPDATED FEDERAL STANDARD RENEWAL AND PRODUCT
DISCONTINUATION NOTICES IN THE INDIVIDUAL MARKET
FEDERAL STANDARD RENEWAL AND PRODUCT DISCONTINUATION
NOTICES IN THE SMALL GROUP MARKET

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