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Self-Funded Nonfederal Governmental Plans

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Summary Information
Procedures and Requirements
Model Documents
Searchable Database of Sponsors Electing to Opt-Out
Statutes and Regulations

Summary Information

A nonfederal governmental employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to exempt its plan from the requirements of title XXVII of the Public Health Service (PHS) Act, with the exception of requirements pertaining to the certification and disclosure of an individual's creditable coverage under the plan. Title XXVII was added to the PHS Act by Title I of HIPAA, and has been amended by the Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the Women's Health and Cancer Rights Act of 1998. Sponsors of nonfederal governmental plans are permitted to exempt their self-funded plans from requirements of Title XXVII by section 2721(b)(2) of the PHS Act (42 U.S.C. 300gg-21(b)(2)).

We wish to emphasize that the applicability of section 2721(b)(2) is very limited; it applies only to self-funded nonfederal governmental plans. It does not apply to either insured or self-funded plans of employers that are not governmental employers, nor to insured plans of governmental employers. Also, section 2721(b)(2) provides no authority for sponsors of self-funded, nonfederal governmental plans to exempt their plans from any applicable standards or requirements, related to the transmission, privacy, and security of certain health information, that may be established under 42 U.S.C. §1320d, et seq. (the Administrative Simplification provisions added by title II of HIPAA). Note, however, that depending on the size of the nonfederal governmental plan, and how it is administered, it might not meet the definition of a group health plan under 42 U.S.C. §1320d(5)(A), and therefore might not be subject to the Administrative Simplification provisions. Regulations addressing the 2721(b)(2) exemption are found at 45 CFR 146.180.

Procedures and Requirements

1. An exemption for a self-funded nonfederal governmental plan is not automatic.
   
   
2. If the sponsor of a self-funded nonfederal governmental plan wishes to exempt its plan from one or more requirements of title XXVII, it must notify CMS to that effect in writing. (See Model HIPAA Exemption Election Document.)
   
   
3. An election to opt-out of one or more of the requirements of title XXVII of the PHS Act may be sent to CMS at the following address:
   CENTERS for MEDICARE and MEDICAID SERVICES
   PRIVATE HEALTH INSURANCE GROUP, CMSO
   ATTN: OPT-OUT
   7500 SECURITY BOULEVARD
   S3-16-16
   BALTIMORE, MD 21244-1850
   or via facsimile to 410-786-8001.
   
   
4. An election applies for a single specified plan year, or, in the case of a plan provided pursuant to a collective bargaining agreement, for the term of the agreement.
   
   
5. A plan sponsor may renew an opt-out election for a subsequent plan year (or period of plan coverage) by notifying CMS in writing. (See Model HIPAA Exemption Election Document.)
   
   
6. Under an opt-out election, the plan must provide for: (1) notice to enrollees, at the time of enrollment and on an annual basis*, of the fact and consequences of the election (See Model notice to Enrollees in a Self-Funded Nonfederal Governmental Group Health Plan); and (2) certification and disclosure of an individual's creditable coverage under the plan.
   
   *IMPORTANT: The annual notice to plan enrollees generally must be disseminated BEFORE the plan year begins for a plan's initial exemption election and, in the case of an exemption election renewal, for any title XXVII requirement from which the plan is to be exempted but from which the plan was not exempt during the immediately preceding plan year. (See 45 CFR 146.180(f)(2) and (g)(3) under Statutes and Regulations.)
   
   
7. A copy of the enrollee notice should be attached to the initial election notification that is submitted to CMS.
   
   
8. For additional information, contact David Holstein at 410-786-1564 or by email at mailto:Dholstein@cms.hhs.gov
   
   

Model Documents

Use of model format is not required, but requested information must be provided to CMS.

1. Model HIPAA Exemption Election Document
   PDF (59K)
   
   
2. Model Notice to Enrollees in a Self-Funded Nonfederal Governmental Group Health Plan
   PDF (66K)
   
   

Searchable Database of Sponsors Electing to Opt-Out

Search the database of plan sponsors that have submitted a current opt-out election or renewal.

Statutes and Regulations

• Federal Register Document: Final Rule for Non-Federal Government Plans Exempt from HIPAA Title I Requirements
  PDF (96K)
  
  
• Federal Register Document: Interim Final Rule for Non-Federal Governmental Plans Exempt from HIPAA Title I Requirements
  PDF (180K)
  
  
• Regulation: 45 CFR 146.180 Treatment of Non-Federal governmental plans.
  PDF (124K)
  
  
• Statute: Portion of HIPAA Statute Regarding Exemption Elections for Self-Funded Nonfederal Governmental Plans (Sec. 2721(b)(2))
  PDF (40K)