Programs
Topics
Resources
|
HHS Mental Health Parity Regulations
Centers for Medicare and Medicaid Services
45 CFR Subtitle A, Subchapter B
45 CFR Part 146 is amended as follows:
PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
1. The authority citation for Part 146 is revised to read as
follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the PHS
Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92).
2. A new Subpart C is added to Part 146 to read as follows:
Subpart C--Requirements Related to Benefits
Sec. 146.136 Parity in the application of certain limits to mental
health benefits.
- Definitions. For purposes of this section, except where the
context clearly indicates otherwise, the following definitions apply:
Aggregate lifetime limit means a dollar limitation on the total
amount of specified benefits that may be paid under a group health plan
(or group health insurance coverage offered in connection with such
plan) for an individual (or for a group of individuals considered a
single unit in applying this dollar limitation, such as a family or an
employee plus spouse).
Annual limit means a dollar limitation on the total amount of
specified benefits that may be paid in a 12-month period under a plan
(or group health insurance coverage offered in connection with such
plan) for an individual (or for a group of individuals considered a
single unit in applying this dollar limitation, such as a family or an
employee plus spouse).
Medical/surgical benefits means benefits for medical or surgical
services, as defined under the terms of the plan or group health
insurance coverage, but does not include mental health benefits.
Mental health benefits means benefits for mental health services,
as defined under the terms of the plan or group health insurance
coverage, but does not include benefits for treatment of substance
abuse or chemical dependency.
- Requirements regarding limits on benefits--
- In general--
- General parity requirement. A group health plan (or health
insurance coverage offered by an issuer in connection with a group
[[Page 66962]]
(health plan) that provides both medical/surgical benefits and mental
health benefits must comply with paragraph (b)(2), paragraph (b)(3), or
paragraph (b)(6) of this section.
- Exception. The rule in paragraph (b)(1)(i) of this section
does not apply if a plan, or coverage, satisfies the requirements of
paragraph (e) or paragraph (f) of this section.
- Plan with no limit or limits on less than one-third of all
medical/surgical benefits. If a plan (or group health insurance
coverage) does not include an aggregate lifetime or annual limit on any
medical/surgical benefits or includes aggregate lifetime or annual
limits that apply to less than one-third of all medical/surgical
benefits, it may not impose an aggregate lifetime or annual limit,
respectively, on mental health benefits.
- Plan with a limit on at least two-thirds of all medical/
surgical benefits. If a plan (or group health insurance coverage)
includes an aggregate lifetime or annual limit on at least two-thirds
of all medical/surgical benefits, it must either--
- Apply the aggregate lifetime or annual limit both to the
medical/surgical benefits to which the limit would otherwise apply and
to mental health benefits in a manner that does not distinguish between
the medical/surgical and mental health benefits; or
- Not include an aggregate lifetime or annual limit on mental
health benefits that is less than the aggregate lifetime or annual
limit, respectively, on the medical/surgical benefits.
- Examples. The rules of paragraphs (b) (2) and (3) of this
section are illustrated by the following examples:
- Example 1.
- Prior to the effective date of the mental health
parity provisions, a group health plan had no annual limit on
medical/surgical benefits and had a $10,000 annual limit on mental
health benefits. To comply with the parity requirements of this
paragraph (b), the plan sponsor is considering each of the following
options:
- Eliminating the plan's annual limit on mental
health benefits;
- Replacing the plan's previous annual limit on mental health
benefits with a $500,000 annual limit on all benefits (including
medical/surgical and mental health benefits); and
- Replacing the plan's previous annual limit on mental health
benefits with a $250,000 annual limit on medical/surgical benefits
and a $250,000 annual limit on mental health benefits.
- In this Example 1, each of the three options being
considered by the plan sponsor would comply with the requirements of
this section because they offer parity in the dollar limits placed
on medical/surgical and mental health benefits.
- Example 2.
- Prior to the effective date of the mental health
parity provisions, a group health plan had a $100,000 annual limit
on medical/surgical inpatient benefits, a $50,000 annual limit on
medical/surgical outpatient benefits, and a $100,000 annual limit on
all mental health benefits. To comply with the parity requirements
of this paragraph (b), the plan sponsor is considering each of the
following options:
- Replacing the plan's previous annual limit on mental health
benefits with a $150,000 annual limit on mental health benefits; and
- Replacing the plan's previous annual limit on mental health
benefits with a $100,000 annual limit on mental health inpatient
benefits and a $50,000 annual limit on mental health outpatient
benefits.
- In this Example 2, each option under consideration by the
plan sponsor would comply with the requirements of this section
because they offer parity in the dollar limits placed on medical/
surgical and mental health benefits.
- Example 3.
- A group health plan that is subject to the
requirements of this section has no aggregate lifetime or annual
limit for either medical/surgical benefits or mental health
benefits. While the plan provides medical/surgical benefits with
respect to both network and out-of-network providers, it does not
provide mental health benefits with respect to out-of-network
providers.
- In this Example 3, the plan complies with the requirements
of this section because they offer parity in the dollar limits
placed on medical/surgical and mental health benefits.
- Example 4.
- Prior to the effective date of the mental health
parity provisions, a group health plan had an annual limit on
medical/surgical benefits and a separate but identical annual limit
on mental health benefits. The plan included benefits for treatment
of substance abuse and chemical dependency in its definition of
mental health benefits. Accordingly, claims paid for treatment of
substance abuse and chemical dependency were counted in applying the
annual limit on mental health benefits. To comply with the parity
requirements of this paragraph (b), the plan sponsor is considering
each of the following options:
- Making no change in the plan so that claims paid
for treatment of substance abuse and chemical
dependency continue to count in applying the annual
limit on mental health benefits;
- Amending the plan to count claims paid for treatment of
substance abuse and chemical dependency in applying the annual limit
on medical/surgical benefits (rather than counting those claims in
applying the annual limit on mental health benefits);
- Amending the plan to provide a new category of benefits for
treatment of chemical dependency and substance abuse that is subject
to a separate, lower limit and under which claims paid for treatment
of substance abuse and chemical dependency are counted only in
applying the annual limit on this separate category; and
- Amending the plan to eliminate distinctions between medical/
surgical benefits and mental health benefits and establishing an
overall limit on benefits offered under the plan under which claims
paid for treatment of substance abuse and chemical dependency are
counted with medical/surgical benefits and mental health benefits in
applying the overall limit.
- In this Example 4, the group health plan is described in
paragraph (b)(3) of this section. Because mental health benefits are
defined in paragraph (a) of this section as excluding benefits for
treatment of substance abuse and chemical dependency, the inclusion
of benefits for treatment of substance abuse and chemical dependency
in applying an aggregate lifetime limit or annual limit on mental
health benefits under option (A) of this Example 4 would not comply
with the requirements of paragraph (b)(3) of this section. However,
options (B), (C), and (D) of this Example 4 would comply with the
requirements of paragraph (b)(3) of this section because they offer
parity in the dollar limits placed on medical/surgical and mental
health benefits.
- Determining one-third and two-thirds of all medical/surgical
benefits. For purposes of this paragraph (b), the determination of
whether the portion of medical/surgical benefits subject to a limit
represents one-third or two-thirds of all medical/surgical benefits is
based on the dollar amount of all plan payments for medical/surgical
benefits expected to be paid under the plan for the plan year (or for
the portion of the plan year after a change in plan benefits that
affects the applicability of the aggregate lifetime or annual limits).
Any reasonable method may be used to determine whether the dollar
amounts expected to be paid under the plan will constitute one-third or
two-thirds of the dollar amount of all plan payments for medical/
surgical benefits.
- Plan not described in paragraph (b)(2) or paragraph (b)(3) of
this section--
- In general. A group health plan (or group health
insurance coverage) that is not described in paragraph (b)(2) or
paragraph (b)(3) of this section, must either impose--
- No aggregate lifetime or annual limit, as
appropriate, on mental health benefits; or
- An aggregate lifetime or annual limit on mental health benefits
that is no less than an average limit for medical/surgical benefits
calculated in the following manner. The average limit is calculated by
taking into account the weighted average of the aggregate lifetime or
annual limits, as appropriate, that are applicable to the categories of
medical/surgical benefits. Limits based on delivery systems, such as
inpatient/outpatient treatment, or normal treatment of common, low-cost
conditions (such as treatment of normal births), do not constitute
categories for purposes of this paragraph (b)(6)(i)(B). In addition,
for purposes of determining
[[Page 66963]]
weighted averages, any benefits that are not within a category that is
subject to a separately-designated limit under the plan are taken into
account as a single separate category by using an estimate of the upper
limit on the dollar amount that a plan may reasonably be expected to
incur with respect to such benefits, taking into account any other
applicable restrictions under the plan.
- Weighting. For purposes of this paragraph (b)(6), the
weighting applicable to any category of medical/surgical benefits is
determined in the manner set forth in paragraph (b)(5) of this section
for determining one-third or two-thirds of all medical/surgical
benefits.
- (iii) Examples. The rules of this paragraph (b)(6) are illustrated
by the following example:
- Example. (i) A group health plan that is subject to the
requirements of this section includes a $100,000 annual limit on
medical/surgical benefits related to cardio-pulmonary diseases. The
plan does not include an annual limit on any other category of
medical/surgical benefits. The plan determines that 40% of the
dollar amount of plan payments for medical/surgical benefits are
related to cardio-pulmonary diseases. The plan determines that
$1,000,000 is a reasonable estimate of the upper limit on the dollar
amount that the plan may incur with respect to the other 60% of
payments for medical/surgical benefits.
- (ii) In this Example, the plan is not described in
paragraph (b)(3) of this section because there is not one annual limit that
applies to at least two-thirds of all medical/surgical benefits.
Further, the plan is not described in paragraph (b)(2) of this
section because more than one-third of all medical/surgical benefits
are subject to an annual limit. Under this paragraph (b)(6), the
plan sponsor can choose either to include no annual limit on mental
health benefits, or to include an annual limit on mental health
benefits that is not less than the weighted average of the annual
limits applicable to each category of medical/surgical benefits. In
this example, the minimum weighted average annual limit that can be
applied to mental health benefits is $640,000 (40% * $100,000 + 60%
* $1,000,000 = $640,000).
- Rule in the case of separate benefit packages. If a group
health plan offers two or more benefit packages, the requirements of
this section, including the exemption provisions in paragraph (f) of
this section, apply separately to each benefit package. Examples of a
group health plan that offers two or more benefit packages include a
group health plan that offers employees a choice between indemnity
coverage or HMO coverage, and a group health plan that provides one
benefit package for retirees and a different benefit package for
current employees.
- Applicability--
- Group health plans. The requirements of this
section apply to a group health plan offering both medical/surgical
benefits and mental health benefits regardless of whether the mental
health benefits are administered separately under the plan.
- Health insurance issuers. The requirements of this section
apply to a health insurance issuer offering health insurance coverage
for both medical/surgical benefits and mental health benefits in
connection with a group health plan.
- Scope. This section does not--
- Require a group health plan (or health insurance issuer
offering coverage in connection with a group health plan) to provide
any mental health benefits; or
- Affect the terms and conditions (including cost sharing,
limits on the number of visits or days of coverage, requirements
relating to medical necessity, requiring prior authorization for
treatment, or requiring primary care physicians' referrals for
treatment) relating to the amount, duration, or scope of the mental
health benefits under the plan (or coverage) except as specifically
provided in paragraph (b) of this section.
- Small employer exemption--
- In general. The requirements of
this section do not apply to a group health plan (or health insurance
issuer offering coverage in connection with a group health plan) for a
plan year of a small employer. For purposes of this paragraph (e), the
term small employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least two but not more than 50 employees on business days
during the preceding calendar year and who employs at least two
employees on the first day of the plan year. See regulations at
Sec. 146.145(a), which provide that this section (and certain other
sections) does not apply to any group health plan (and health insurance
issuer offering coverage in connection with a group health plan) for
any plan year if, on the first day of the plan year, the plan has fewer
than two participants who are current employees.
- Rules in determining employer size. For purposes of paragraph
(e)(1) of this section--
- All persons treated as a single employer under subsections (b),
(c), (m), and (o) of section 414 of the Internal Revenue Code of 1986
(26 U.S.C. 414) are treated as one employer;
- If an employer was not in existence throughout the preceding
calendar year, whether it is a small employer is determined based on
the average number of employees the employer reasonably expects to
employ on business days during the current calendar year; and
- Any reference to an employer for purposes of the small
employer exemption includes a reference to a predecessor of the
employer
- Increased cost exemption--
- In general. A group health plan
(or health insurance coverage offered in connection with a group health
plan) is not subject to the requirements of this section if the
requirements of this paragraph (f) are satisfied. If a plan offers more
than one benefit package, this paragraph (f) applies separately to each
benefit package. Except as provided in paragraph (h) of this section, a
plan must comply with the requirements of paragraph (b)(1)(i) of this
section for the first plan year beginning on or after January 1, 1998,
and must continue to comply with the requirements of paragraph
(b)(1)(i) of this section until the plan satisfies the requirements in
this paragraph (f). In no event is the exemption of this paragraph (f)
effective until 30 days after the notice requirements in paragraph
(f)(3) of this section are satisfied. If the requirements of this
paragraph (f) are satisfied with respect to a plan, the exemption
continues in effect (at the plan's discretion) until September 30,
2001, even if the plan subsequently purchases a different policy from
the same or a different issuer and regardless of any other changes to
the plan's benefit structure.
- Calculation of the one-percent increase--
- Ratio. A group
health plan (or group health insurance coverage) satisfies the
requirements of this paragraph (f)(2) if the application of paragraph
(b)(1)(i) of this section to the plan (or to such coverage) results in
an increase in the cost under the plan (or for such coverage) of at
least one percent. The application of paragraph (b)(1)(i) of this
section results in an increased cost of at least one percent under a
group health plan (or for such coverage) only if the ratio below equals
or exceeds 1.01000. The ratio is determined as follows:
- The incurred expenditures during the base period,
divided by,
- The incurred expenditures during the base period, reduced
by--
- The claims incurred during the base period that
would have been denied under the terms of the plan
absent plan amendments required to comply with this
section, and
- Administrative expenses attributable to complying with the
requirements of this section.
- Formula. The ratio of paragraph (f)(2)(i) is expressed
mathematically as follows:
[[Page 66964]]
- IE means the incurred expenditures during the base period.
- CE means the claims incurred during the base period that
would have been denied under the terms of the plan absent plan
amendments required to comply with this section.
- AE means administrative costs related to claims in CE and
other administrative costs attributable to complying with the
requirements of this section.
- Incurred expenditures. Incurred expenditures means actual
claims incurred during the base period and reported within two months
following the base period, and administrative costs for all benefits
under the group health plan, including mental health benefits and
medical/surgical benefits, during the base period. Incurred
expenditures do not include premiums.
- Base period. Base period means the period used to calculate
whether the plan may claim the one-percent increased cost exemption in
this paragraph (f). The base period must begin on the first day in any
plan year that the plan complies with the requirements of paragraph
(b)(1)(i) of this section and must extend for a period of at least six
consecutive calendar months. However, in no event may the base period
begin prior to September 26, 1996 (the date of enactment of the Mental
Health Parity Act (Pub. L. 104-204, 110 Stat. 2944)).
- Rating pools. For plans that are combined in a pool for rating
purposes, the calculation under this paragraph (f)(2) for each plan in
the pool for the base period is based on the incurred expenditures of
the pool, whether or not all the plans in the pool have participated in
the pool for the entire base period. (However, only the plans that have
complied with paragraph (b)(1)(i) of this section for at least six
months as a member of the pool satisfy the requirements of this
paragraph (f)(2).) Otherwise, the calculation under this paragraph
(f)(2) for each plan is calculated by the plan administrator (or
issuer) based on the incurred expenditures of the plan.
- Examples. The rules of this paragraph (f)(2) are illustrated
by the following examples:
- Example 1.
- A group health plan has a plan year that is the
calendar year. The plan satisfies the requirements of paragraph
(b)(1)(i) of this section as of January 1, 1998. On September 15,
1998, the plan determines that $1,000,000 in claims have been
incurred during the period between January 1, 1998 and June 30, 1998
and reported by August 30, 1998. The plan also determines that
$100,000 in administrative costs have been incurred for all benefits
under the group health plan, including mental health benefits. Thus,
the plan determines that its incurred expenditures for the base
period are $1,100,000. The plan also determines that the claims
incurred during the base period that would have been denied under
the terms of the plan absent plan amendments required to comply with
this section are $40,000 and that administrative expenses
attributable to complying with the requirements of this section are
$10,000. Thus, the total amount of expenditures for the base period
had the plan not been amended to comply with the requirements of
paragraph (b)(1)(i) of this section are $1,050,000 ($1,100,000--
($40,000 + $10,000) = $1,050,000).
- In this Example 1, the plan satisfies the requirements of
this paragraph (f)(2) because the application of this section
results in an increased cost of at least one percent under the terms
of the plan ($1,100,000/$1,050,000 = 1.04762).
- Example 2.
- A health insurance issuer sells a group health
insurance policy that is rated on a pooled-basis and is sold to 30
group health plans. One of the group health plans inquires whether
it qualifies for the one percent increased cost exemption. The
issuer performs the calculation for the pool as a whole and
determines that the application of this section results in an
increased cost of 0.500 percent (for a ratio under this paragraph
(f)(2) of 1.00500) for the pool. The issuer informs the requesting
plan and the other plans in the pool of the calculation.
- In this Example 2, none of the plans satisfy the
requirements of this paragraph (f)(2) and a plan that purchases a
policy not complying with the requirements of paragraph (b)(1)(i) of
this section violates the requirements of this section. In addition,
an issuer that issues to any of the plans in the pool a policy not
complying with the requirements of paragraph (b)(1)(i) of this
section violates the requirements of this section.
- Example 3.
- A partially-insured plan is collecting the
information to determine whether it qualifies for the exemption. The
plan administrator determines the incurred expenses for the base
period for the self-funded portion of the plan to be $2,000,000 and
the administrative expenses for the base period for the self-funded
portion to be $200,000. For the insured portion of the plan, the
plan administrator requests data from the insurer. For the insured
portion of the plan, the plan's own incurred expenses for the base
period are $1,000,000 and the administrative expenses for the base
period are $100,000. The plan administrator determines that under
the self-funded portion of the plan, the claims incurred for the
base period that would have been denied under the terms of the plan
absent the amendment are $0 because the self-funded portion does not
cover mental health benefits and the plan's administrative costs
attributable to complying with the requirements of this section are
$1,000. The issuer determines that under the insured portion of the
plan, the claims incurred for the base period that would have been
denied under the terms of the plan absent the amendment are $25,000
and the administrative costs attributable to complying with the
requirements of this section are $1,000. Thus, the total incurred
expenditures for the plan for the base period are $3,300,000
($2,000,000 + $200,000 + $1,000,000 + $100,000 = $3,300,000) and the
total amount of expenditures for the base period had the plan not
been amended to comply with the requirements of paragraph (b)(1)(i)
of this section are $3,273,000 ($3,300,000 - ($0 + $1,000 + $25,000
+ $1,000) = $3,273,000).
- In this Example 3, the plan does not satisfy the
requirements of this paragraph (f)(2) because the application of
this section does not result in an increased cost of at least one
percent under the terms of the plan ($3,300,000/$3,273,000 =
1.00825).
- Notice of exemption--
- Participants and beneficiaries--
- In general. A group health plan must notify participants
and beneficiaries of the plan's decision to claim the one
percent increased cost exemption. The notice must include the
following information:
- A statement that the plan is exempt from the requirements of
this section and a description of the basis for the exemption.
- The name and telephone number of the individual to contact for
further information.
- The plan name and plan number (PN).
- The plan administrator's name, address, and telephone number.
- For single-employer plans, the plan sponsor's name, address,
and telephone number (if different from paragraph (f)(3)(i)(A)(3) of
this section) and the plan sponsor's employer identification number
(EIN).
- The effective date of such exemption.
- The ability of participants and beneficiaries to contact the
plan administrator to see how benefits may be affected as a result of
the plan's election of the exemption.
- The availability, upon request and free of charge, of a summary
of the information required under paragraph (f)(4) of this section.
- Use of summary of material reductions in covered services or
benefits. A plan may satisfy the requirements of paragraph (f)(3)(i)(A)
by providing participants and beneficiaries (in accordance with
paragraph (f)(3)(i)(C)) with a summary of material reductions in
covered services or benefits consistent with Department of Labor
regulations at 29 CFR 2520.104b-3(d) that also includes the information
of this paragraph (f)(3)(i). However, in all cases, the exemption is
not effective until 30 days after notice has been sent.
- Delivery. The notice described in this paragraph (f)(3)(i) is
required to be
[[Page 66965]]
provided to all participants and beneficiaries. The notice may be
furnished by any method of delivery that satisfies the requirements of
section 104(b)(1) of ERISA (29 U.S.C. 1024(b)(1)) (e.g., first-class
mail). If the notice is provided to the participant at the
participant's last known address, then the requirements of this
paragraph (f)(3)(i) are satisfied with respect to the participant and
all beneficiaries residing at that address. If a beneficiary's last
known address is different from the participant's last known address, a
separate notice is required to be provided to the beneficiary at the
beneficiary's last known address.
- Example. The rules of this paragraph (f)(3)(i) are illustrated
by the following example:
- A group health plan has a plan year that is the
calendar year and has an open enrollment period every November 1
through November 30. The plan determines on September 15 that it
satisfies the requirements of paragraph (f)(2) of this section. As
part of its open enrollment materials, the plan mails, on October
15, to all participants and beneficiaries a notice satisfying the
requirements of this paragraph (f)(3)(i).
- In this Example, the plan has sent the notice in a manner
that complies with this paragraph (f)(3)(i).
- Federal agencies--
- Church plans. A church plan (as defined
in section 414(e) of the Internal Revenue Code) claiming the exemption
of this paragraph (f) for any benefit package must provide notice to
the Department of the Treasury. This requirement is satisfied if the
plan sends a copy, to the address designated by the Secretary in
generally applicable guidance, of the notice described in paragraph
(f)(3)(i) of this section identifying the benefit package to which the
exemption applies.
- Group health plans subject to Part 7 of Subtitle B of Title I
of ERISA. A group health plan subject to Part 7 of Subtitle B of Title
I of ERISA, and claiming the exemption of this paragraph (f) for any
benefit package, must provide notice to the Department of Labor. This
requirement is satisfied if the plan sends a copy, to the address
designated by the Secretary in generally applicable guidance, of the
notice described in paragraph (f)(3)(i) of this section identifying the
benefit package to which the exemption applies.
- Nonfederal governmental plans. A group health plan that
is a nonfederal governmental plan claiming the exemption of this paragraph
(f) for any benefit package must provide notice to the Department of
Health and Human Services (HHS). This requirement is satisfied if the
plan sends a copy, to the address designated by the Secretary in
generally applicable guidance, of the notice described in paragraph
(f)(3)(i) of this section identifying the benefit package to which the
exemption applies.
- Availability of documentation. The plan (or issuer) must make
available to participants and beneficiaries (or their representatives),
on request and at no charge, a summary of the information on which the
exemption was based. An individual who is not a participant or
beneficiary and who presents a notice described in paragraph (f)(3)(i)
of this section is considered to be a representative. A representative
may request the summary of information by providing the plan a copy of
the notice provided to the participant under paragraph (f)(3)(i) of
this section with any individually identifiable information redacted.
The summary of information must include the incurred expenditures, the
base period, the dollar amount of claims incurred during the base
period that would have been denied under the terms of the plan absent
amendments required to comply with paragraph (b)(1)(i) of this section,
the administrative costs related to those claims, and other
administrative costs attributable to complying with the requirements
for the exemption. In no event should the summary of information
include any individually identifiable information.
- Special rules for group health insurance coverage--
- Sale of nonparity policies. An issuer may sell a policy without
parity (as described in paragraph (b) of this section) only to a plan that meets
the requirements of paragraph (e) or paragraph (f) of this section.
- Duration of exemption. After a plan meets the requirements of
paragraph (f) of this section, the plan may change issuers without
having to meet the requirements of paragraph (f) of this section again
before September 30, 2001.
- Effective dates--
- In general. The requirements of this
section are applicable for plan years beginning on or after January 1,
1998.
- Limitation on actions.
- Except as provided in paragraph (h)(3) of this section, no
enforcement action is to be taken by the
Secretary against a group health plan that has sought to comply in good
faith with the requirements of section 2705 of the PHS Act, with
respect to a violation that occurs before the earlier of--
- The first day of the first plan year beginning on or after
April 1, 1998; or
- January 1, 1999.
- Compliance with the requirements of this section is deemed to
be good faith compliance with the requirements of section 2705 of the
PHS Act.
- (iii) The rules of this paragraph (h)(2) are illustrated by the
following examples:
- Example 1.
- A group health plan has a plan year that is the
calendar year. The plan complies with section 2705 of the PHS Act in
good faith using assumptions inconsistent with paragraph (b)(6) of
this section relating to weighted averages for categories of
benefits.
- In this Example 1, no enforcement action may be taken
against the plan with respect to a violation resulting solely from
those assumptions and occurring before January 1, 1999.
- Example 2.
- A group health plan has a plan year that is the
calendar year. For the entire 1998 plan year, the plan applies a
$1,000,000 annual limit on medical/surgical benefits and a $100,000
annual limit on mental health benefits.
- In this Example 2, the plan has not sought to comply with
the requirements of section 2705 of the PHS Act in good faith and
this paragraph (h)(2) does not apply.
- Transition period for increased cost exemption--
- In general.
No enforcement action will be taken against a group health plan that is
subject to the requirements of this section based on a violation of
this section that occurs before April 1, 1998 solely because the plan
claims the increased cost exemption under section 2705(c)(2) of the PHS
Act based on assumptions inconsistent with the rules under paragraph
(f) of this section, provided that a plan amendment that complies with
the requirements of paragraph (b)(1)(i) of this section is adopted and
effective no later than March 31, 1998 and the plan complies with the
notice requirements in paragraph (h)(3)(ii) of this section.
- Notice of plan's use of transition period.
- A group health plan satisfies the requirements of this paragraph (h)(3)(ii) only if
the plan provides notice to the applicable federal agency and posts the
notice at the location(s) where documents must be made available for
examination by participants and beneficiaries under section 104(b)(2)
of ERISA and the regulations thereunder (29 CFR 2520.104b-1(b)(3)). The
notice must indicate the plan's decision to use the transition period
in paragraph (h)(3)(i) of this section by 30 days after the first day
of the plan year beginning on or after January 1, 1998, but in no event
later than March 31, 1998. For a group health plan that is a church
plan, the applicable federal agency is the Department of the Treasury.
For a group
[[Page 66966]]
health plan that is subject to Part 7 of Subtitle B of Title I of
ERISA, the applicable federal agency is the Department of Labor. For a
group health plan that is a nonfederal governmental plan, the
applicable federal agency is the Department of Health and Human
Services. The notice must include--
- The name of the plan and the plan number (PN);
- The name, address, and telephone number of the plan
administrator;
- For single-employer plans, the name, address, and telephone
number of the plan sponsor (if different from the plan administrator)
and the plan sponsor's employer identification number (EIN);
- The name and telephone number of the individual to contact for
further information; and
- The signature of the plan administrator and the date of the
signature.
- The notice must be provided at no charge to participants or
their representative within 15 days after receipt of a written or oral
request for such notification, but in no event before the notice has
been sent to the applicable federal agency.
- Sunset. This section does not apply to benefits for services
furnished on or after September 30, 2001.
Dated: December 16, 1997.
Nancy-Ann Min DeParle,
Administrator, Centers for Medicare & Medicaid Services.
Dated: December 16, 1997.
Donna E. Shalala,
Secretary, Department of Health and Human Services.
[FR Doc. 97-33262 Filed 12-19-97; 8:45 am]
BILLING CODE 4830-01-P; 4510-29-P; 4120-01-P
Last Modified on Friday, September 17, 2004
|