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Thursday, May 13, 2010 
Part 
Department the Treasury 
Internal Revenue Service CFR Parts and 602 

Department Labor 
Employee Benefits Security Administration CFR Part 2590 

Department Health and Human Services CFR Parts 144, 146, and 147 
Group Health Plans and Health Insurance Issuers Relating Dependent Coverage Children Age Under the Patient Protection and Affordable Care Act; Interim Final Rule and Proposed Rule 

DEPARTMENT THE TREASURY All comments will made available Human Services, Attention: OCII0to the public. Warning: not include 4150-IFC, Mail Stop C4-26-05, 7500 
Internal Revenue Service 

any personally identifiable information Security Boulevard, Baltimore, 
(such name, address, other contact 21244-1850. CFR Parts and 602 
[TD 9482] 
information) confidential business information that you not want 
publicly disclosed. All comments are 
RIN 1545-BJ46 
posted the Internet exactly the comment period either the 
DEPARTMENT LABOR 
Employee Benefits Security 
Administration CFR Part 2590 
RIN 1210-AB41 
DEPARTMENT HEAL AND 
HUMAN SERVICES 
Office the Secretary 
[OCll0-41 So-IFC] CFR Parts 144, 146, and 147 
RIN 0991-AB66 
Interim Final Rules for Group Health 
Plans and Health Insurance Issuers Relating Dependent Coverage Children Age Under the Patient 
Protection and Affordable Care Act 

AGENCY: Internal Revenue Service, Department the Treasury; Employee Benefits Security Administration, Department Labor; Department 
Health and Human Services. 
ACTION: Interim final rules with request for comments. 
SUMMARY: This document contains interim final regulations implementing the requirements for group health plans and health insurance issuers the group and individual markets under provisions the Patient Protection and Affordable Care Act regarding dependent coverage children who have not attained age 26. 
DATES: Effective date. These interim final regulations are effective July 12, 2010. 
Comment date. Comments are due before 11, 2010. 
date. These interim final regulations generally apply group health plans and group health insurance issuers for plan years beginning after September 23, 2010. These interim 
final regulations generally apply 
individual health insurance issuers for 
policy years beginning after 
September 23, 2010. 
ADDRESSES: Written comments may 
submitted any the addresses 
specified below. Any comment that 
submitted any Department will 
shared with the other Departments. 
Please not submit duplicates. 
received, and can retrieved most Internet search engines. deletions, modifications, redactions will made the comments received, they are public records. Comments may submitted anonymously. 

Department Labor. Comments the Department Labor, identified RIN 1210-AB41, one the following methods: 
 
Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. 

 
E-mail: E-OHPSCA.EBSA@dol.gov. 

 Mail Hand Delivery: Office Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department Labor, 200 Constitution Avenue NW., Washington, 20210, Attention:RIN 1210-AB41. 
Comments received the Department Labor will posted without change http:// www.regulations.gov and http:!I www.dol.gov/ebsa, and available for public inspection the Public Disclosure Room, N-1513, Employee Benefits Security Administration, 200 Constitution Avenue, NW., Washington, 20210. 
Department Health and Human Services. commenting, please refer file code OCII0-4150-IFC. Because staff and resource limitations, cannot accept comments facsimile (FAX) transmission. 
You may submit comments one four ways (please choose only one the ways listed): 
Electronically. You may submit electronic comments this regulation http://www.regulations.gov. Follow the instructions under the "More Search Options" tab. regular mail. You may mail written comments the following address only: Office Consumer Information and Insurance Oversight, Department Health and Human Services, Attention: OCII0--4150-IFC, 

P.O. Box 8016, Baltimore, 212441850. 
Please allow sufficient time for mailed comments received before the close the comment period. express overnight mail. You may send written comments the following address only: Office Consumer Information and Insurance Oversight, Department Health and addresses: For Washington,

Office Consumer Information and Insurance Oversight, Department Health and Human Services, Room 445G, Hubert Humphrey Building, 200 Independence Avenue, SW., Washington, 20201 (Because access the interior the Hubert Humphrey Building not readily available persons without Federal government identification, commenters are encouraged leave their comments the OCIIO drop slots located the main lobby the building. stamp-in clock available for persons wishing retain proof filing stamping and retaining extra copy the comments being filed.). For delivery Baltimore,

Centers for Medicare Medicaid Services, Department Health and Human Services, 7500 Security Boulevard, Baltimore, 21244-1850. you intend deliver your comments the Baltimore address, please call (410) 786-7195 advance schedule your arrival with one our staff members. 
Comments malled the addresses indicated appropriate for hand courier delivery may delayed and received after the comment period. 
Submission comments paperwork requirements. You may submit comments this document's paperwork requirements following the instructions the end the "Collection Information Requirements" section this document. 
Inspection Public Comments: All comments received before the close the comment period are available for viewing the public, including any personally identifiable confidential business information that included comment. post all comments received before the close the comment period the following Web site soon possible after they have been received: http:// www.regulations.gov. Follow the searc instructions that Web site view public comments. 
Comments received timely will also available for public inspection they are received, generally beginning approximately three weeks after publication document, the headquarters the Centers for Medicare Medicaid Services, 7500 Security 

27123 
Boulevard, Baltimore, Maryland 21244, Monday through Friday each week from 8:30 a.m. p.m. EST. schedule appointment view public comments, phone 1-800-743-3951. 
Internal Revenue SeIVice. Comments the IRS, identified REG-11449410, one the following methods: 
 Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. 
 
Mail: CC:P A:LPD:PR (REG-11449410), room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, 20044. 

 
Hand courier delivery: Monday through Friday between the hours 

a.m. and p.m. to: CC:PA:LPD:PR (REG-114494-10), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington 20224. 
All submissions the IRS will open public inspection and copying room 1621, 1111 Constitution Avenue, Washington, from 
a.m. p.m. 

FOR FURTHER INFORMATION CONTACT: 
Amy Turner Beth Baum, Employee Benefits Security Administration, Department Labor, (202) 693-8335; Karen Levin, Internal Revenue Service, Department the Treasury, (202) 622-6080; Jim Mayhew, Office Consumer Information and Insurance Oversight, Department Health and Human Services, (410) 786-1565. 
Customer SeIVice Information: 

Individuals interested obtaining information from the Department Labor concerning employment-based health coverage laws may call the EBSA Toll-Free Hotline 1-866-444-EBSA (3272) visit the Department Labor's Web site (http://www.dol.gov/ebsa). addition, information from HHS private health insurance for consumers can found the Centers for Medicare Medicaid Services (CMS) Web site (http://www.cms.hhs.gov/ 
HealthinsReformf orConsumel 01_OveIView.asp). 
SUPPLEMENTARY INFORMATION: Background 
The Patient Protection and Affordable Care Act (the Affordable Care Act), Public Law 111-148, was enacted 
March 23, 2010; the Health Care and 
Education Reconciliation Act (the 
Reconciliation Act), Public Law 111
152, was enacted March 30, 2010. 
The Affordable Care Act and the 
Reconciliation Act reorganize, amend, 
and add the provisions part 
title XXVII the Public Health Service 
Act (PHS Act) relating group health 
plans and health insurance issuers 

the group and individual markets. The term "group health plan" includes both insured and self-insured group health plans.1 The Affordable Care Act adds section 715 the Employee Retirement Income Security Act (ERISA) and section 9815 the Internal Revenue Code (the Code) make the provisions part title XXVII the PHS Act applicable under ERISA and the Code group health plans, and health insurance issuers providing health insurance coverage connection with group health plans, those provisions the PHS Act were included ERISA and the Code. The PHS Act sections incorporated this reference are sections 2701 through 2728. PHS Act sections 2701 through 2719A are substantially new, though they incorporate some provisions prior law. PHS Act sections 2722 through 2728 are sections prior law renumbered with some, mostly minor, changes. Section 1251 the Affordable Care Act, modified section 10103 the Affordable Care Act and section 2301 the Reconciliation Act, specifies that certain plans coverage existing the date enactment (i.e., grandfathered health plans) are subject only certain provisions. 
Subtitles and title the Affordable Care Act amend the requirements title XXVII the PHS Act (changes which are incorporated into ERISA section 715). The preemption provisions ERISA section 731 and PHS Act section 2724 (implemented CFR 2590.731(a) and CFR 146.143(a)) apply that the requirements the Affordable Care Act are not "construed supersede any provision State law which establishes, implements, continues effect any standard requirement solely relating health insurance issuers connection with group individual health insurance coverage except the extent that such standard requirement prevents the application requirement" the Affordable Care Act. Accordingly, State laws that impose health insurance issuers stricter requirements than those imposed the Affordable Care Act will not superseded the Affordable 
Care Act. 
'The term "group health plan" used title XXVIl the PHS Act, part ERISA, and chapter 100 the Code, and distinct from the term "health plan". used other provisions title the Affordable Care Act. The term "health plan" does not include self-insured group health plans. Code section 9815 incorporates the preemption provisions PHS Act section 724. Prior the Affordable Care Act, there were express preemption provisions chapter 100 the Code. 

The Departments Health and Human Services, Labor, and the Treasury (the Departments) expect issue regulations implementing the revised PHS Act sections 2701 through 2719A several phases. The first publication this series was Request for Information relating the medical loss ratio provisions PHS Act section 2718, published the Federal Register April 14, 2010 (75 19297). These interim final regulations are being published implement PHS Act section 2714 (requiring dependent coverage children age 26). PHS Act section 2714 generally effective for plan years (in the individual market, policy years) beginning after September 23, 2010, which six months after the March 23, 2010 date enactment the Affordable Care Act. The implementation other provisions PHS Act sections 2701 through 2719A and section 1251 the Affordable Care Act will addressed future regulations. 
Because subtitles and title the Affordable Care Act contain requirements that are applicable both the group and individual health insurance markets, would duplicative insert the requirements into both the existing CFR part 146 (Requirements for the Group Health Insurance Market) and CFR part 148 (Requirements for the Individual Health Insurance Market). Accordingly, these interim final regulations create new part 147 subchapter CFR implement the provisions the Affordable Care Act. The provisions the Affordable Care Act, the extent that they apply group health plans and group health insurance coverage, are also implemented under new regulations added CFR part 2590 and CFR part 54. 
II. Overview the Regulations PHS Act Section 2714, Continued Eligibility Children Until Age (26 CFR 54.9815-2714, CFR 2590.7152714, CFR 147.120) 
Section 2714 the PHS Act, added the Affordable Care Act (and amended the Reconciliation Act), and these interim final regulations 
provide that plan issuer that makes 
available dependent coverage 
children must make such coverage 
available for children until attainment See section 1004 the Affordable Care Act. 

For purposes these interim final regulations, dependent coverage means coverage any individual nnder the terms group health plan, group individual health insurance coverage, because the relationship participant (in the individual market. primary subscriber). years age. The statute also 
requires the issuance regulations 
"define the dependents which 
coverage shall made available" under 
this rule. 
Many group health plans that provide dependent coverage limit the coverage health coverage excludible from employees' gross income for income tax purposes. Thus, dependent coverage limited employees' spouses and employees' children that qualify dependents for income tax purposes. Consequently, these plans often condition dependent coverage, addition the age the child, student status, residency, and financial support other factors indicating dependent status. However, with the expansion dependent coverage required the Affordable Care Act children until age 26, conditioning coverage whether child tax dependent student, resides with receives financial support from the parent, longer appropriate light the correlation between age and these factors. Therefore, these interim final regulations not allow plans coverage use these requirements deny dependent coverage children. Because the statute does not distinguish between coverage for minor children and coverage for adult children under age 26, these factors also may not used determine eligibility for dependent coverage for minor children. 
Accordingly, these interim final regulations clarify that, with respect children who have not attained age 26, plan issuer may not define dependent for purposes eligibility for dependent coverage children other than terms the relationship between the child and the participant (in the individual market, the primary subscriber). Examples factors that cannot used for defining dependent for purposes eligibility (or continued eligibility) include financial dependency the participant primary subscriber (or any other person), residency with the participant primary subscriber (or any other person), student status, employment, eligibility for other coverage, any combination these. These interim final regulations also provide that the terms the plan policy for dependent coverage cannot vary based the age child, except for children age older. Examples illustrate that surcharges for coverage children under age are not allowed except where the surcharges apply regardless the age the child (up age 26) and that, for children under age 26, the plan cannot vary benefits based the age the child. The Affordable Care Act, 
originally enacted, required plans and 
issuers make dependent coverage 
available only child "who not 
married." This language was struck 
section 2301(b) the Reconciliation 
Act. Accordingly, under these interim 
final regulations, plans and issuers may 
not limit dependent coverage based 
whether child married. (However, 
plan issuer not required under 
these interim final regulations cover 
the spouse eligible child). 
The statute and these interim final regulations provide that nothing PHS Act section 2714 requires plan issuer make available coverage for child child receiving dependent coverage. 
Under section 1004(d) the Reconciliation Act and IRS Notice 2010--38 (released the public April 27, 2010 and scheduled published 2010-20 Internal Revenue Bulletin, May 17, 2010), employers may exclude from the employee's income the value any employer-provided health coverage for employee's child for the entire taxable year the child turns the coverage continues until the end that taxable year. This means that child turns March, but stays the plan past December 31st (the end most people's taxable year), the health benefits December 31st can excluded for tax purposes. 

Application grandfathered health plans. Under the statute and these interim final regulations, the requirement make available dependent coverage for children who have not attained age generally applies all group health plans and health insurance issuers offering group individual health insurance coverage whether not the plan health insurance coverage qualifies grandfathered health plan under section 1251 the Affordable Care Act, for plan years (in the individual market, policy years) beginning after September 23, 2010. However, accordance with section 2301(a) the Reconciliation Act, for plan years beginning before January 2014, these interim final regulations provide that grandfathered health plan that group health plan that makes available dependent coverage children may 
exclude adult child who has not 
attained age from coverage only the child eligible enroll employer-sponsored health plan (as Section 1251 the Affordable Care Act, modified section 10103 the Affordable Care Act and seetlon 2301 the Reconciliation Act. specifies that certain plans coverage existing the March 23. 2010 date enactment (i.e., grandfathered health plans) are subject only certain provisions. 
defined section 5000A(f)(2) the 
Code} other than group health plan parent. the case adult child 
who eligible for coverage under the 
plans the employers both parents, 
neither plan may exclude the adult 
child from coverage based the fact 
that the adult child eligible enroll the plan the other parent's 
employer. 
Regulations relating grandfathered health plans under section 1251 the Affordable Care Act are expected published the very near future. The Departments anticipate that the regulations will make clear that changes plan policy terms comply with PHS Act section 2714 and these interim final regulations, including voluntary compliance before plan years (in the individual market, policy years) beginning after September 23, 2010, will not cause plan health insurance coverage lose grandfathered health plan status for any purpose under the Affordable Care Act, amended. 

Transitional Rule. Prior the applicability date PHS Act section 2714, child who was covered under group health plan health insurance coverage dependent may have lost eligibility under the plan (or coverage) due age prior age 26. Moreover, if, when parent first became eligible for coverage, child was under age but older than the age which the plan (or coverage} stopped covering children, the child would not have become eligible for the plan (or coverage). When the provisions section 2714 become applicable, plan issuer can longer exclude coverage for the child prior age irrespective whether when that child was enrolled the plan (or coverage}. Also, child primary subscriber with family coverage the individual market may entitled opportunity enroll the child previously lost coverage due age while other family members retained the coverage. 
Accordingly, these interim final regulations provide transitional relief for child whose coverage ended, who was denied coverage (or was not the group market, section 9802(a) the Code, section 702(a) ERISA, and section 2705 the PHS Act provide that plan issuer cannot impose any rule for eligibility for benefits (including any rule excluding coverage) based health factor, including preexisting condition. These rules were added HIPAA and generally became applicable for group health plans for plan years beginning after July 1997. Similar guidance regarding re-enrollment rights for individuals previously denied coverage due health factor was issued the Departments the Treasury, Labor, and HHS December 29, 1997, 67689 and January 2001 1378, 1403,1410, 1418. 

Federal Register/Vol. 75, No. /Thursday, May 13, 2010/Rules and Regulations 27125 
eligible for coverage) under group health plan health insurance coverage because, under the terms the plan coverage, the availability dependent coverage children ended before the attainment age 26. 
These interim final regulations require plan issuer give such child opportunity enroll that continues for least days (including written notice the opportunity enroll), regardless whether the plan coverage offers open enrollment period and regardless when any open enrollment period might otherwise occur. This enrollment opportunity (including the written notice) must provided not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010. Thus, many plans can use their existing annual enrollment periods (which commonly begin and end before the start the plan year) satisfy the enrollment opportunity requirement. the child enrolled, coverage must begin not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010, even the request for enrollment made after the first day the plan year. subsequent years, dependent coverage may elected for eligible child connection with normal enrollment opportunities under the plan 
Under interim final regulations, the notice may provided employee behalf the employee's child (in the individual market, primary subscriber behalf the primary subscriber's child). addition, for group health plan group health insurance coverage, the notice may included with other enrollment materials that plan distributes employees, provided the statement prominent. For group health plan group health insurance coverage, notice satisfying these requirements provided employee whose child entitled enrollment opportunity, the obligation provide the notice enrollment opportunity with respect that child satisfied for both the plan and the issuer. 
Any child enrolling group health plan coverage pursuant this enrollment right must treated special enrollee, provided under the regulations interpreting the HIP portability provisions.7 Accordingly, the child must offered all the benefit 
7HIPAA tbe Health Insurance Portability and Accountability Act 1996 (Public Law 104-191). Regulations regarding the treatment HIPAA special enrollees are included CFR 54.98016(d), CFR 2590.701--6(d), and CFR 146.117(d). 
packages available similarly situated individuals who did not lose coverage reason cessation dependent status. The child also cannot required pay more for coverage than similarly situated individuals who did not lose coverage reason cessation dependent status. 
The Departments have been informed that many health insurance issuers have announced that they will allow continued coverage adult children before such coverage required the Affordable Care Act. plan issuer that allows continued coverage adult children before being required the Affordable Care Act not required provide the enrollment opportunity with respect children who not lose coverage. 

Examples these interim final regulations illustrate the application these transitional rules. One example illustrates that, child qualifies for enrollment opportunity under this section and the parent not enrolled but otherwise eligible for enrollment, the plan must provide opportunity enroll the parent, addition the child. Similarly, another example illustrates that, plan has more than one benefit package option, child qualifies for enrollment under this section, and the parent enrolled one benefit package option, the plan must provide opportunity enroll the child any benefit package option for which the child otherwise eligible (thus allowing the parent switch benefit package options). Another example illustrates that child who qualifies for enrollment opportunity under this section and who covered under COBRA continuation provision must given the opportunity enroll dependent active employee (i.e., other than COBRA-qualified beneficiary). this situation, the child loses eligibility for coverage due qualifying event (including aging out coverage age 26), the child has another opportunity elect COBRA continuation coverage. (If the qualifying event aging out, the COBRA continuation coverage could last months from the loss eligibility that relates turning age 26.) The final example this section illustrates that employee who joined plan prior the applicability date PHS Act section 2714, and has child who never enrolled because the child was too old under the terms the plan but has not yet turned 26, must provided opportunity enroll the child under this section even though the child was not previously covered under the plan. the parent longer eligible for coverage under the plan (for example, 
the parent has ceased employment with the plan sponsor) the first date which the enrollment opportunity would required given, the plan would not required enroll the child. Conforming Changes Under the PHS Act References the Public Health Service Act 
Conforming changes references sections title XXVII the PHS Act are made throughout parts 144 and 146 title the Code Federal Regulations reflect the renumbering certain sections the Affordable Care Act. Definitions (45 CFR 144.103) 

These interim final regulations define "policy year" the 12-month period that designated the policy documents individual health insurance coverage. the policy document does not designate policy year (or such document available), then the policy year the deductible limit year used under the coverage. deductibles other limits are not imposed yearly basis, the policy year the calendar year. The Affordable Care Act uses the term "plan year" referring the period coverage both the individual and group health insurance markets. The term "plan year", however, generally used the group health insurance market. Accordingly, these interim final regulations substitute the term "policy year" for "plan year" defining the period coverage the individual health insurance market. 
III. Interim Final Regulations and Request for Comments 
Section 9833 the Code, section 734 ERISA, and section 2792 the PHS Act authorize the Secretaries the Treasury, Labor, and HHS (collectively, the Secretaries) promulgate any interim final rules that they determine are appropriate carry out the provisions chapter 100 the Code, part subtitle title ERISA, and part title XXVII the PHS Act, which include PHS Act sections 2701 through 2728 and the incorporation those sections into BRISA section 715 and Code section 9815. addition, under Section 553(b) the Administrative Procedure Act (AP U.S.C. 551 seq.) general notice proposed rulemaking not required when agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, contrary the public interest. The 

27126 Federal Register /Vol. 75, No. /Thursday, May 13, 2010 Rules and Regulations 

provisions the APA that ordinarily require notice proposed rulemaking not apply here because the specific authority granted section 9833 the Code, section 734 ERISA, and section 2792 the PHS Act. However, even the APA was applicable, the Secretaries have determined that would impracticable and contrary the public interest delay putting the provisions these interim final regulations place until full public notice and comment process completed. The statutory requirement implemented these interim final regulations was enacted March 23, 2010, and applies for plan years (in the individual market, policy years) beginning after September 23, 2010. Having binding rule effect critical ensuring that individuals entitled the new protections being implemented have 

these protections uniformly 
Moreover, the provisions interim final regulations require lead time for implementation. These interim final regulations require that enrollment period provided later than the first day the obligation allow dependent children enroll until attainment age takes effect. Preparations presumably would have made put such enrollment process place. Group health plans and health insurance issuers also would have take the cost associated with this new obligation into account establishing their premiums, and making other changes the designs plan policy benefits, and any such premiums and changes would have receive necessary approvals advance the policy year 
For foregoing reasons, Departments have determined that essential provide certainty about what will required group health plans and health insurance issuers under the statutory requirements implemented binding regulations far advance September 23, 2010 possible. This makes impracticable engage full notice and comment rulemaking before putting regulations into effect, and the public interest through interim final regulations under which the public will have opportunity for comment, but that opportunity will not delay putting rules effect delay that could possibly last past September 23, 2010). 
Issuance proposed regulations would not sufficient because the proposed regulations would not binding, and different group health plans health insurance issuer could interpret the statutory language different ways. Had the Departments published notice proposed rulemaking, provided for 60-day comment period, and only then prepared final regulations, which would subject 60-day delay effective date, unlikely that would have been possible have final regulations effect before late September, when these requirements could effect for some plans policies. therefore the public interest that these interim final regulations effect and apply when the statutory protections being implemented apply. 
IV. Economic Impact and Paperwork Burden Summary-Department Labor and Department Health and Human Services stated earlier this preamble, these interim final regulations implement PHS Act section 2714, which requires plans issuers that make dependent coverage available for children continue make such coverage available for adult child until the attainment age 26. The regulation also provides enrollment opportunity individuals who lost were not eligible for dependent coverage before age 26.8 This provision generally effective for plan years (in the individual market, policy years) beginning after September 23, 2010, which six months after the March 23, 2010 date enactment the Affordable Care Act. 
The Departments have crafted these interim final regulations secure the protections intended Congress the most economically efficient manner possible. The Departments have quantified costs where possible and provided qualitative discussion the economic benefits and some the transfers and costs that may stem from these interim final regulations. Executive Order 12866-Department Labor and Department Health and Human Services 
Under Executive Order 12866 (58 51735), this regulatory action has been determined "significant" and therefore subject review the Office 
The Affordable Care Act adds section 715 and Code section make the provisions part title XXVII the PHS Act applicable group health plans, and health insurance issuers providing health insurance coverage connection with group health plans, under ERISA and the Code those provisions the PHS Act were mcluded ERISA and the Code. The PHS Act sections incorporated this reference are sections 2701 through 2728. Section 1251 the Affordable Care Act provides rules for grandfathered health plans, and these rules are further clarified section 10103 the Affordable Care Act and section 2301 the Reconciliation Act. 
Management and Budget (OMB). Section 3(f) the Executive Order defines "significant regulatory action" action that likely result rule (1) having annual effect the economy $100 million more any one year, adversely and materially affecting sector the economy, productivity, competition, jobs, the environment, public health safety, State, local tribal governments communities (also referred "economically significant"); (2) creating serious inconsistency otherwise interfering with action taken planned another agency; (3) materially altering the budgetary impacts entitlement grants, user fees, loan programs the rights and obligations recipients thereof; (4) raising novel legal policy issues arising out legal mandates, the President's priorities, the principles set forth the Executive Order. OMB has determined that this regulation economically significant within the meaning section 3(f)(1) the Executive Order, because likely have annual effect the economy $100 million any one year. Accordingly, OMB has reviewed these rules pursuant the Executive Order. The Departments provide assessment the potential costs, benefits, and transfers associated with the regulatory provision below. The Departments invite comments this assessment and its conclusions. Need for Regulatory Action 
PHS Act section 2714, added the Affordable Care Act and amended the Reconciliation Act requires group health plans and health insurance issuers offering group individual health insurance coverage that make dependent coverage available for children continue make coverage available such children until the attainment age 26. With respect child receiving dependent coverage, coverage does not have extended child children the child spouse the child. addition, provided the Reconciliation Act, grandfathered group health plans are not required offer dependent coverage child under who otherwise eligible for employer-sponsored insurance other than group health plan parent for plan years beginning before January 2014. PHS Act section 2714 generally effective for plan years (in the individual market, policy years) beginning after September 23, 2010. Thus, these interim final regulations are necessary amend the Departments' existing regulations 

implement these statutorily mandated changes. Summaiy Impacts this section, the Departments estimate the number individuals affected these interim final regulations, and the impact the regulations health insurance premiums the group and individual markets. Beginning with the population individuals age 19-25, the number individuals potentially affected 
Benefits: 
estimated applying several criteria including whether their parents have existing employer-sponsored insurance (ESI) individual market policy; 
and whether the individuals are 
themselves uninsured, have ESL individual market policies other forms coverage. range assumptions concerning the percentage the potentially affected individuals that will accept the offer new dependent coverage-"take-up" rates-
TABLE 1-ACCOUNTING TABLE then applied estimate the number newly covered individuals. The premium impact calculated using estimated incremental insurance cost per newly-covered individual percent average family premiums. accordance, with OMB Circular A-4,9 Table below depicts accounting statement showing the Departments' assessment the benefits, costs, and transfers associated with this regulatory action. 

Annualized Quantified: low estimate 0.19 million previously uninsured individuals gain coverage 2011. mid-range estimate ........... .......... .... 0.65 million previously uninsured individuals gain coverage 2011 high estimate .... .................... ........ 1.64 million previously uninsured individuals gain coverage 2011.

Qualitative: Expanding coverage options the 19-25 population should decrease the number uninsured, which turn should decrease the cost-shifting uncompensated care onto those with insurance, increase the receipt preventive health care and provide more timely access high quality care, resulting healthier population. Allowing extended dependent coverage will also permit greater job mobility for this population their insurance coverage will longer lied their own jobs student status. Dependents aged 19-25 that have chronic other serious health conditions would still able continue their current coverage through parent's plan. the extent there increase beneficial utilization healthcare, health could improve. 
Discount 

Costs10  Low estimate  Mid-range estimate  High estimate  Year dollar  rate percent  Period covered11  
Annualized Monetized ($millions/year) ............................  11.2  11.2  11.2  2010  2011-2013  
10.4  10.4  10.4  2010  2011-2013 one-lime notice right enroll must sent those affected. Qualitative: the extent additional coverage increases utilization health care services, there will additional costs incurred achieve the health benefits. 
Transfer:12 Annualized Monetized ($millions/year) ......... ........ 3,459.3 5,250.2 6,893.9 2010 2011-2013

3,482.5 5,274.5 6,895.4 2010 2011-2013 
Qualitative: the rule causes family health insurance premiums increase, there will transfer from individuals with family health insurance coverage who not have dependents aged 19-25 those individuals with family health insurance coverage that have dependents aged 19-25. the extent that these higher premiums result lower profits higher prices for the employer's product, then the higher premiums will result transfer either from stockholders consumers. 
rnThe cost estimates are annualize across the years 2011-2013, and reflects single point estimate the cost send out notice the first year only. The Departments limited the period covered the RIA 2011-2013, because has reliable data make projections over this period due the fact that 2014, things will change drastically when the subsidies and tax offset premium increases and the exchanges are effect. 
12The estimates this table reflect the annualized discounted value 2010 the additional premium costs for family policies calculated the product the newly covered dependents each year from 2011-2013 (see below) and incremental cost per newly-covered person 
those years (see below). Estimated Number Affected Individuals 
The Departments' estimates this section are based the 2004-2006 Medical Expenditure Panel Survey Household Component (MEPS-HC) which was projected and calibrated 2010 consistent with the National Health Accounts projections. The Departments estimate that 2010, there are approximately 29.5 million individuals aged 19-25 (young adults} the United States. those individuals, 9.3 million young adults (of whom 3.1 million are uninsured) not have parent who has either ESI nongroup insurance, and thus they have access dependent coverage. shown Table among the remaining 20.2 million young adults whose parents are covered either ESI non-group insurance: 
 
3.44 million are currently uninsured, 

 
2.42 million are covered their own non-group insurance, 

 
5.55 million are covered their own ESI, 

 
5.73 million are already their parent's spouse's ESI, and 

 
3.01 million have some other form coverage such Medicaid TRI CARE. 

Available http://wv.w.whitehouse.gov/omb/ circulars/a004/a-4.pdf 

TABLE 2-YOUNG ADULTS AGED 19-25 INSURANCE STATUS ESI
Uninsured* Non-group Own ESI Other Total
dependent 

Total U.S. Population Aged 19-25 .................................. 6.59 2.69 6.98 All Young Adults U.S. with Parent with Policy Young Adult Insurance Status 
Parents have ESI 3.28 2.03 5.32
................ ................................... ........

2.91 

Parents have non-group 0.16 0.40 0.23
........................................ .......... 

0.10 ..... .......... ... 

Subtotal 

 
2.42 
5.73 3.01 20.15 

*The bolded numbers are potentially affected the regulation. 
Source: EPS 24-2006 Survys. ?Ontolled 2010 consistent with the National Health Accounts. Note: Total number young adults, age 19-25 29.5 mlllron; the 20.15 mrllron thrs Table are the subset whose parents have either ESI non-group coverage. 
Initially, the subset this group young adults that will affected these interim final regulations are those who are either uninsured (3.44 million) covered individual coverage (2.42 million). The statute does not require grandfathered group health plans offer coverage young adults who currently have their own ESI offer ESL For the purposes this analysis, assumed that all plans begin 2011 with grandfathered status. These impacts could change plans lose their Grandfathered status. these 5.86 million young adults, shown Table 3.49 million are also unlikely switch their parents' coverage because: 
 They are already allowed enroll extended dependent coverage for young adults through their State's existing laws, but have chosen not (2.61 million). Thirty-seven states already have requirements concerning dependent coverage the group market, although most these are substantially more restrictive than those contained this regulation.13 Using information about State laws obtained from the Kaiser Family Foundation,14 State State profile State required coverage based person's State residence, age, student status, and living situation was developed. This profile was then overlaid MEPS data obtain estimate the number individuals that would newly become eligible for coverage due these interim final regulations. 
 They have offer ESI and have parents who are covered ESI (0.48 million). For the purposes this regulatory impact statement, the Departments assume that the parents these young adults will 
grandfathered group health plans, and 
thus that these young adults will not affected the provisions these interim final regulations. the extent that some the coverage which these parents are enrolled not grandfathered, the effect these interim final regulations will larger than the estimates provided here. 
 Finally, there are 0.40 million young adults who have non-group coverage and whose parents have nongroup coverage. Because the parents' non-group coverage underwritten, there not likely any financial benefit the family moving the young adult onto the parents' coverage, and the Departments assume that these young adults will not affected the regulation. 

TABLE 3-"UNINSURED" AND "NON-GROUP" YOUNG ADULTS UNLIKELY AFFECTED EXTENDING DEPENDENT 
COVERAGE AGE  
Uninsured  Non-Group coverage  Total  
(1) Young adults potentially covered parent ESI due state law ....... ............................... .............. (2) Young adults with offer ESI whose parents have ESI  (3) Young adults with non-group coverage whose parents have non-group coverage ..........................  1.30 0.31 ................. ...  1.31 0.17 0.40  2.61 0.48 0.40  
Subtotal .........................................................................................................................................  1.61  1.88  3.49 shown Table this leaves the age group. Among the currently uninsured, and 0.55 million approximately 2.37 million young approximately 2.37 million young are currently covered their own nonadults who might affected this adults who are estimated group coverage. provision, approximately eight potentially affected this provision, percent the 29.5 million young adults approximately 1.83 million are 
TABLE 4-YOUNG ADULTS POTENTIALLY AFFECTED EXTENDING DEPENDENT COVERAGE AGE 
Uninsured  Non-group coverage  Total  
Parents have ESI ....................................................................................................................................  1.67  0.55  2.21  
Parents have non-group .........................................................................................................................  0.16  ......... ...........  0.16  

''Restrictions include requirements for financial described Kaiser Family Foundation, Health Facts, http://www.statehealthfacts.org/ dependency, student status, and age limits. Definition Dependency Age, 2010, KFF State comparetable.jsp?ind=601 cat=7. 

Federal Register /Vol. 75, No. 92/Thursday, May 13, 2010/Rules and Regulations 27129 
TABLE 4-YOUNG ADULTS POTENTIALLY AFFECTED EXTENDING DEPENDENT COVERAGE AGE 26-Continued 
Non-group

Uninsured Total

coverage 
Total (Subtotal A-Subtotal B)* 

1.83 0.55 2.37 Source: MEPS 2004-2006 Surveys, controlled 201 consistent with projections the National Health Accounts. 
subtotal Table and Subtotal Bis Table difficult estimate precisely what fraction the 2.37 million young adults who might potentially affected the provision will actually enroll their parents' coverage. study Monheit and Cantor the early experience States that have extended coverage dependents suggests that few uninsured children these States shift their parents' policy.15 However, data and methodological difficulties inevitably lead substantial uncertainty about the finding. 
The Departments considered two other points reference estimate take-up rates. One the work that has analyzed take-up rates among people made newly eligible for public coverage Medicaid expansions. These studies suggest take-up rates the range 1034 percent.16 However, the populations eligible for these expansions have different socio-demographic compositions than those eligible for the dependent coverage provisions covered under these interim final regulations, and the decision take-up Medicaid clearly different than the decision cover child parent's private insurance policy. second point reference are estimates from the Kaiser/ HRET Employer Health benefits Survey which suggest that, depending the size the worker contribution, between percent and percent employees accept offers family policies. Again, these estimates would based group that differs characteristics from those eligible for new dependent coverage. These concerns notwithstanding, the analyses Medicaid expansions and employee take-up employer sponsored coverage provide useful reference. 

Recognizing 
uncertainty the area, the Departments produced range assumptions concerning take-up rates. developing the range take-up rates, the Departments assume that these rates will vary the following factors: 
(1) The young adult's current health coverage status (uninsured young adults are less likely take advantage the dependent coverage option than young adults already covered non-group insurance, because young adults who have purchased non-group insurance have shown strong preference for coverage, and can almost always save money and get better coverage switching their parents' policy); (2) the young adult's health status (young adults fair poor health are more likely take advantage the option than those excellent, very good good health), and (3) the young adult's living situation (those living with their parents are more likely take the option than those not living with their parents). 
The almost fully covered "high" take-up rate scenario assumes that regardless health insurance status, percent young adults living home and percent those not living home would move dependent coverage. For the mid-range scenario, the Departments assume that relative the high take-up rate scenario, percent the uninsured whose health status was fair poor health and percent those good excellent health would move dependent coverage. the low take-up rate scenario, the Departments adjusted the percentages percent and percent the high take-up rate scenario. all three scenarios, the same assumptions apply individuals with non-group policies whose parents have ESI-95 percent those living home and percent those living elsewhere would move dependent coverage. the low take-up rate scenario, the assumptions lead the result that approximately percent eligibles will enroll dependent coverage. the mid-range scenario, they result approximate percent take-up rate, and the high take-up scenario, they result approximate percent take-up rate. The Departments are uncertain regarding which these scenarios most likely but are confident that they bracket the expected outcome. 
TABLE 5-NUMBER INDIVIDUALS WITH NEW DEPENDENT COVERAGE AND IMPACT GROUP INSURANCE PREMIUMS, 
2011-2013 

Low estimate Mid-range estimate High estimate 
2011 2012 2013 2011 2012 2013 2011 2012 2013 
Individuals with New Dependent Coverage (millions) ..... 0.68 0.97 1.08 1.24 1.60 1.65 2.12 2.07 1.98 From Uninsured (millions) ................................................ 0.29 0.33 0.65 0.94 0.91 1.64 1.42 1.21 Incremental Premium Cost Per Individual Coverage ...... $3,670 $3,800 $4,000 $3,380 $3,500 $3,690 $3,220 $3,340 $3,510 
0.7

Impact Group Insurance Premiums (%) ..................... 

1.0 1.0 1.2 1.2 Monheit, A., Cantor, al, "State Policies Expanding Dependent Coverage Young Adults Private Health Insurance Plans," presented the Academy Health State Health Research and Policy Interest Group Meeting, Chicago IL, June 27, 2009. Bansak, Cynthia and Steven Raphael. "The Effects State Policy Design Features Take-Up and Crowd-out Rates fro the State Children's Health Insurance Program." Journal Policy Analysis and Management, Vol. 26, No. 149-175. 2006. Find that for the time period 1998-2002 take-up rates for SCRIP were about percent. 
Currie, Janet and Jonathan Gruber. "Saving babies: The Efficacy and Cost Recent Changes Medicaid Eligibility Pregnant Women." The Journal Political Economy, Vol. 104, No. Dec. 1996, pp. 1263-1296. Find for Medicaid expansions during the 1979-1992 period the take-up rate for eligible pregnant women was percent. 
Cutler, David and Jonathan Gruber. "Does Public Insurance Crowd Out Private Insurance?" The Quarterly Journal Economics, Vol. 111, No. May 1996, pp. 391-430. Find that for the Medicaid expansions from 1987-1992 the take-up rate for the uninsured close percent, while for pregnant women was seven percent. 
Gruber, Jonathan and Kosali Simon. "Crowd-Out Ten years Later: Have Recent Public Insurance Expansions Crowded Out Private Health Insurance?" NBER Working Paper 12858. January 2007. Find that for the Medicaid expansions during 1996-2002 the take-up rate was percent across all children, but nearly one-third for uninsured children. Found http://www.kff.org/insurance/ snapshot/chcm020707oth.cfm. 

These take-up rate assumptions are then applied the number potentially affected individuals displayed Table The resulting number individuals with new dependent coverage summarized Table Under the mid-range take-up rate assumption, the Departments estimate that 2011, 1.24 million young adults will newly covered their parents' ESI non-group market policies, whom 0.65 million were previously uninsured, and 0.6 million were previously covered non-group coverage. The number individuals newly covered their parents' plans would and 2.12 million under the high and low take-up rate assumptions respectively, with 0.2 and 1.64 million these individuals being previously uninsured. Relative the individuals covered under the high take-up rate assumption, higher proportions the low-and mid-range assumption groups are accounted for people who previously had non-group coverage (72 percent and percent respectively contrast percent for the high takeup rate group) This difference result the Departments' assumption for the low-and mid-range take-up rates that people with non-group coverage will more likely than healthy people who were uninsured take advantage the dependent coverage option. 
Under the mid-range take-up rate assumptions, the estimated number young adults covered their parents' plans 2012 increases somewhat over the 2011 estimate 1.6 million total, whom approximately 0.9 million would have been uninsured. The increase the estimate for 2012 results from the assumption that children reach the age that would have caused them excluded from their parents' policy before the implementation these interim final regulations, large fraction them now will remain their parents' policy. Similarly, the estimated number young adults enrolling their parents' non-gro policy increases from just under 75,000 2011 approximately 100,000 2012, and 120,000 2013. Benefits The benefits these interim final regulations are expected outweigh the costs the regulated community. the mid-range take-up rate assumption, the Departments estimate that 2011, 0.65 million previously uninsured individuals will now covered their parent's policies due these interim final regulations and 1.24 million individuals total will now 
covered their parent's coverage. Expanding coverage options for the 19-25 population should decrease the number uninsured, which turn should decrease the cost-shifting uncompensated care onto those with coverage, increase the receipt preventive health care and provide more timely access high quality care, resulting healthier population. particular, children with chronic conditions other serious health issues will able continue coverage through parent's plan until age 26. Allowing extended dependent coverage also will permit greater job mobility for this population their health coverage will longer tied their own jobs student status. Costs and Transfers Associated With the Rule 
Estimates for the incremental annual premium costs for the newly covered individuals are developed based expenditure data from MEPS and vary based the take-up rate assumptions. These incremental costs are lowest for the high take-up rate assumption since the newly covered group would contain relatively high percentage individuals whose health status was good excellent. Conversely, the low take-up rate assumption results the highest incremental costs because higher percentage the newly covered individuals would those whose health status was fair poor. For those enrolling their parents' ESI, the expected annual premium cost under the mid-range take-up rate assumption would $3,380 2011, $3,500 2012 and $3,690 2013. these costs were distributed among all family ESI plans, family premiums would expected rise 0.7 percent 2011, 1.0 percent 2012, and 1.0 percent 2013 due these interim final regulations.18 The comparable incremental costs and premium effects for the low and high take-up rate assumptions are summarized Table the extent that these increases are passed workers the form higher premiums for all workers purchasing family policies the form lower wages for all workers, there will transfer from workers who not have newly covered dependents those who do. the extent that these higher premiums result lower profits higher prices for the employer's product, the higher premiums will result transfer either from stockholders consumers. addition, the extent that these interim final regulations result decrease the number uninsured, For purposes fuis regulatory impact analysis fue Departments assume fuat fuere would effect premiums for employee-only policies. 

the Departments expect reduction uncompensated care, and reduction liability for those who fund uncompensated care, including public programs (primarily Medicaid and State and local general revenue support for public hospitals). well the portion uncompensated care that paid for the cost shift from private premium payers. Such effects would lead lower premiums for the insured population, both with without newly covered children. 
For the small number children (75,000 2011) enrolling their parents' non-group insurance policy under the mid-range take-up assumption, the Departments expect estimated annual premium cost $2,360 2011, $2,400 2012 and $2,480 2013 large extent, premiums the non-group market are individually underwritten, and the Departments expect that most the premium cost will borne the parents who are purchasing the policy which their child added. If, instead, these costs were distributed over the entire individual market (as would the case pure communityrated market), then individual premiums would expected rise O.7 percent 2011, 1.0 percent 2012, and 1.2 percent 2013 due these interim final regulations. However, the Departments expect the actual increase across the entire individual market, any, will much smal ler than these estimates, because they expect that the costs largely will borne the subscribers who are directly affected rather than distributed across the entire individual market. Enrollment Opportunity 
These interim final regulations provide enrollment opportunity for children excluded from coverage because age before the effective date the rule. The Departments estimate that this information collection request will result approximately 105,000,000 notices being distributed with hour burden approximately 1,100,000 hours and cost burden approximately $2,010,500. For discussion this enrollment opportunity, see the Paperwork 
Reduction Act section later this 

preamble. Regulatory Alternatives Section 6(a)(3)(C)(iii) Executive Order 12866 requires economically significant regulation include assessment the costs and benefits potentially effective and reasonable 
alternatives the planned regulation, and explanation why the planned 

Federal Register /Vol. 75, No. /Thursday, May 13, 2010 Rules and Regulations 271 

regulatory action preferable the potential alternatives. The Departments carefully considered limiting the flexibility plans and policies define who child. However, the Departments concluded, they have other regulatory contexts, that plan sponsors and issuers should free determine whether cover children which children should covered their plans and policies (although they must comply with other applicable Federal State law mandating coverage, such ERISA section 609). Therefore, these interim final regulations have not limited plan's policy's flexibility define who child for purposes the determination children whom coverage must made available. Regulatory Flexibility ActDepartment Labor and Department Health and Human Services 
The Regulatory Flexibility Act 
U.S.C. 601 seq.) (RFA) imposes certain requirements with respect Federal rules that are subject the notice and comment requirements section 553(b) the APA U.S.C. 551 seq.) and that are likely have significant economic impact substantial number small entities. Under Section 553(b) the APA, general notice proposed rulemaking not required when agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, contrary the public interest. These interim final regulations are exempt from APA, because the Departments made good cause finding that general notice proposed rulemaking not necessary earlier this preamble. Therefore, the does not apply and the Departments are not required either certify that the regulations would not have significant economic impact substantial number small entities conduct 

flexibility analysis. 
the Departments carefully considered the likely impact the regulations small entities connection with their assessment under Executive Order 12866. Consistent with the policy the the Departments encourage the public submit comments that suggest alternative rules that accomplish the stated purpose PHS Act section 2714 and minimize the impact small entities. Special Analyses-Department the Treasury 
Notwithstanding the determinations the Department Labor and Department Health and Human Services, for purposes the Department the Treasury, has been determined that this Treasury decision not significant regulatory action for purposes Executive Order 12866. Therefore, regulatory assessment not required. has also been determined that section 553(b) the APA U.S.C. chapter does not apply these interim final regulations. For the applicability the refer the Special Analyses section the preamble the cross-referencing notice proposed rulemaking published elsewhere this issue the Federal Register. Pursuant section 7805() the Code, these temporary regulations have been submitted the Chief Counsel for Advocacy the Small Business Administration for comment their impact small businesses. Paperwork Reduction Act Department Labor and Department the Treasury: Affordable Care Act Enrollment Opportunity Notice Relating Extended Dependent Coverage part their continuing efforts reduce paperwork and respondent burden, the Departments conduct preclearance consultation program provide the general public and federal agencies with opportunity comment proposed and continuing collections information accordance with the Paperwork Reduction Act 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that requested data can provided the desired format, reporting burden (time and financial resources) minimized, collection instruments are clearly understood, and the impact collection requirements respondents can properly assessed. discussed earlier this preamble, prior the applicability date PHS Act section 2714, child who was covered under group health plan (or group health insurance coverage) may have lost eligibility for coverage under the plan due age before age 26. Moreover, child was under age when parent first became eligible for coverage, but older than the age which the plan stopped covering children, the child would not have become eligible for coverage. When the provisions PHS Act section 2714 become applicable the plan (or coverage), the plan coverage can longer exclude coverage for the individual until age 26. 
Accordingly, these interim final regulations require plans provide notice enrollment opportunity individuals whose coverage ended, who were denied coverage (or were not eligible for coverage) under group health plan health insurance coverage because, under the terms the plan coverage, the availability dependent coverage children ended before the attainment age 26. The enrollment opportunity must continue for least days, regardless whether the plan coverage offers open enrollment period and regardless when any open enrollment period might otherwise occur. This enrollment opportunity must presented not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010 (which the applicability date PHS Act section 2714). Coverage must begin not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010.19 
The Affordable Care Act dependent coverage enrollment opportunity notice information collection request (ICR) subject the PRA. Currently, the Departments are soliciting public comments for days concerning these disclosures. The Departments have submitted copy these interim final regulations OMB accordance with U.S.C. 3507(d) for review the information collections. The Departments and OMB are particularly interested comments that: 
 
Evaluate whether the collection information necessary for the proper performance the functions the agency, including whether the information will have practical utility; 

 
Evaluate the accuracy the agency's estimate the burden the collection information, including the validity the methodology and assum}.)tions used; 

 
Enhance the quality, utility, and clarity the information collected; and 

 
Minimize the burden the collection information those who are respond, including through the use appropriate automated, electronic, mechanical, other technological collection techniques other forms information technology, for example, permitting electronic submission responses. 

Comments should sent the Office Information and Regulatory Affairs, Attention: Desk Officer for the Employee Benefits Security Any individual enrolling coverage pursuant this enrollment right must treated special enrollee, provided under HIPAA portability rules. Accordingly. the individual must offered all the benefit packages available similarly situated individuals who did not lose coverage reason cessation dependent status. The individual also cannot required pay more for coverage than similarly situated individuals who did not lose coverage reason cessation dependent status. 

27132 Federal Register IVol. 75, No. /Thursday, May 13, 2010 Rules and Regulations 
Administration either fax (202) 395-7285 e-mail oira_submission@omb.eop.gov. copy the ICR may obtained contacting the PRA addressee: Christopher Cosby, Office Policy and Research, U.S. Department Labor, Employee Benefits Security Administration, 200 Constitution Avenue, NW., Room N-5718, Washington, 20210. Telephone: 
(202) 693-8410; Fax: (202) 219-4745. These are not toll-free numbers. E-mail: ebsa.opr@dol.gov. ICRs submitted OMB also are available reginfo.gov 
(http :Ilwww.regin fo.govlpublic! do! PRAMain). 
The Departments assume that 2,800,000 ERISA covered plans will send the enrollment opportunity notice all 79,573,000 employees eligible for group health insurance coverage. The Departments estimate that preparing the enrollment notice will require minutes legal professional time labor rate $119 per hour and one minute clerical time $26 per hour per paper notice distribute the notices.21 This results hour burden nearly 822,000 hours and associated equivalent cost nearly $21,513,000. 
The Departments estimate that the cost burden associated with distributing the approximately 79,573,000 notices will approximately $2,467,000 based one minute clerical time, and $.05 per page for material and printing costs. The Departments assumed that percent the notices would sent electronically.22 addition, plans can send these notices with other plan Hourly wage estimates are based data from the Bureau Labor Statistics Occupational Employment Survey (May 2008) and the Bureau Labor Statistics Employment Cost Index Uune 2009). All hourly wage rdtes include wages and benefits. Clerical wage and benefits estimates are based metropolitan wage rates for executive secretaries and administrative assistants. Legal professional wage and benefits estimates are based metropolitan wage rates for lawyers. While plans could prepare their own notice, the Departments assume that the notices will prepared service providers. The Departments have previously estimated that there are 630 health insurers (460 providing coverage the group market, and 490 providing coverage the individual market.). These estimates are from NAlC 2007 financial statements data and the California Department Managed Healthcare (2009), http://wpso.dmhc.co.gov/hpsearch/viewall.aspx. 
Because the hour and cost burden shared 
between the Departments Labor/Treasury and the 
Department Health and Human Services, the 
burden prepare the notices calculated using 
half the number insurers (315). For purposes this burden estimate, the Departments assume that percent the disclosures will provided through electronic means accordance with the Department Labor's standards for electronic communication required information provided under CFR 2520.1041:>-l(c). 

documents, such open enrollment materials. Therefore, the Departments have not included postage costs this estimate. The Departments note that persons are not required respond to, and generally are not subject any penalty for failing comply with, ICR unless the ICR has valid OMB control number.23 
These paperwork burden estimates are summarized follows: 
Type Review: New collection. 

Agencies: Employee Benefits Security Administration, Department Labor; Internal Revenue Service, U.S. Department the Treasury. 
Title: Affordable Care Act Enrollment Opportunity Notice Relating 
Extended Coverage. 
OMB 1210-0139; 1545-2172. Affected Public: Business other for-
profit; not-for-profit institutions. 
Total Respondents: 2,800,000. 
Total Responses: 79,573,000. 
Frequency Response: One-time. 

Estimated Total Annual Burden Hours: 411,000 hours (Employee Benefits Security Administration); 411,000 hours (Internal Revenue Service). 
Estimated Total Annual Burden Cost: 

$1,233,500 (Employee Benefits Security Administration); $1,233,500 (Internal Revenue Service). Department Health and Human Services: Affordable Care Act Enrollment Opportunity Notice Relating Extended Dependent Coverage are soliciting public comment the following sections this document that contain information collection requirements (ICR) regarding the Affordable Care Act-ICR Relating Enrollment Opportunity NoticeDependent Coverage. discussed earlier this preamble, the Affordable Care Act and these interim final regulations require issuers the individual market and group health plans sponsored State and local governments notify participants regarding enrollment opportunity related the extension dependent coverage. Prior the applicability date PHS Act section 2714, child who was covered under group health plan (or health insurance coverage) 
may have lost eligibility for coverage under the plan due age before age 26. Moreover, if, when parent first became eligible for coverage, child was under age but older than the age which the plan stopped covering children, the child would not have become eligible for coverage. CFR 1320.1 through 1320.18. 

When the provisions PHS Act section 2714 become applicable the plan (or coverage), the plan coverage can longer exclude coverage for the individual until age 26. 
Accordingly, these interim final regulations require issuers the individual insurance market and group health plans sponsored State and local governments provide notice enrollment opportunity individuals whose coverage ended, who was denied coverage (or was not eligible for coverage) under group health plan group health insurance coverage because, under the terms the plan coverage, the availability dependent coverage children ended before the attainment age 26. The enrollment opportunity must continue for least days, regardless whether the plan coverage offers open enrollment period and regardless when any open enrollment period might otherwise occur. This enrollment opportunity must presented not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010 (which the applicability date PHS Act section 2714). Coverage must begin not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010.24 
The Department estimates that 126,000 State and local governmental plans would have send 19,627,000 notices eligible employees and 490 insurers the individual market would have send approximately 5,444,000 notices individuals with policies covering dependents.25 For purposes this estimate, the Department assumes that will take legal professional, average, minutes prepare the notice labor rate $119 per hour, and one minute, average, clerical professional's time $26 per hour copy and mail the notice. While plans could prepare their own notice, the 
2 Any individual enrolling coverage pursuant this enrollment right must treated special enrollee, provided under HIP portability rules. Accordingly, the individual must offered all the benefit packages available similarly situated individuals wbo did not lose coverage reason cessation dependent status. The individual also cannot required pay more for coverage than similarly situated individuals who did not lose coverage reason cessation dependent status. The number individual insurance notices was based the number individual policy holders with dependents that policy according the 2009 March Current Population Survey (CPS). Estimates labor rates include wages, other 

benefits, and overhead based the National 
Occupational Employment Survey (May 2008, 
Bureau Labor Statistics) and the Employment 
Cost Index June 2009, Bureau Labor Statistics). 

Department assumes that the notices will prepared service providers. The Department has previously 
estimated that there are 630 health insurers (460 providing coverage the group market, and 490 providing coverage the individual market). Because the hour and cost burden shared among the Departments Labor/ Treasury and the Department Health and Human Services, the burden prepare the notices calculated using half the number insurers (315). The Department assumes that percent the notices would sent electronically.29 Notices that are sent electronically not require any the clerical worker's time mail the notice. This results hour burden approximately 259,000 hours and associated equivalent cost about $6,791,000 prepare and distribute 25,071,000 notices. The Department estimates that the cost burden associated with distributing the notices will approximately $777,000.30 The Department assumes that percent the notices would sent electronically. addition, plans and issuers can send these notices with other plan documents (for example, during open enrollment for the government plans, other communication reenrollment the individual market). Therefore, the Department did not include postage costs this estimate. The Department notes that persons are not required respond to, and generally are not subject any penalty for failing comply with, ICR unless the ICR has valid OMB control number. 
These paperwork burden estimates are summarized follows: 
Type Review: New collection. 
Agency: Department Health and Human Services. 
Title: Notice Special Enrollment Opportunity under the Affordable Care Act Relating Dependent Coverage. 
OMB Number: 0938-1089. Affected Public: Business; State, Local, Tribal Governments. Respondents: 126,000. 
 These estimates are from NAIC 2007 fmancial statements data and the California Department Managed Healthcare (2009), http:!! wpso.dmhc.ca.gov!hpsearch/viewall.aspx. For purposes this burden estimate, the Department assumes that percent the disclosures will provided through electronic means. This estimate based average document size one page and S.05 cents per page for material and printing costs. For purposes this burden estimate, the Department assumes that percent the disclosures will provided through electronic means. CFR 1320.1 through 1320.18. 
Responses: 25,071,000. 
Frequency Response: One-time. 
Estimated Total Annual Burden Hours: 259,000 hours. 
Estimated Total Annual Burden Cost: 
$777,000. you comment this information collection and recordkeeping requirements, please either the following: 
Submit your comments electronically specified the ADDRESSES section this proposed rule; 
Submit your comments the Office Information and Regulatory Affairs, Office Management and Budget, 

Attention: CMS Desk Officer, 4140IFC 
Fax: (202) 395-6974; 
E-mail: 
OIRA_submission@omb.eop.gov Congressional Review Act 
These interim final regulations are subject the Congressional Review Act provisions tbe Small Business Regulatory Enforcement Fairness Act 1996 U.S.C. 801 seq.) and have been transmitted Congress and the Comptroller General for review. Unfunded Mandates Reform Act 
The Unfunded Mandates Reform Act 1995 (Pub. 104-4)requrres agencies prepare several analytic statements before proposing any rules that may result annual expenditures $100 million (as adjusted for inflation) State, local and tribal governments the private sector. These interim final regulations are not subject the Unfunded Mandates Reform Act, because they are being issued interim final regulation. However, consistent with the policy embodied the Unfunded Mandates Reform Act, these interim final regul ations have been designed the least burdensome alternative for State, local and tribal governments, and the private sector, while achieving the objectives the Affordable Care Act. Federalism Statement-Department Labor and Department Health and Human Services 
Executive Order 13132 outlines fundamental principles federalism, and requires the adherence specific criteria Federal agencies the process their formulation and implementation policies that have ubstantial direct effects" the States, the relationship between the national government and States, the distribution power and responsibilities among the various levels government. Federal agencies promulgating regulations that have 
these federalism implications must consult with State and local officials, 
and describe the extent their 
consultation and the nature the 
concerns State and local officials the preamble the regulation. the Departments' view, these interim final regulations have federalism implications, because they have direct effects the States, the relationship between the national government and States, the distribution power and responsibilities among various levels government. However, the Departments' view, the federalism implications these interim final regulations are substantially mitigated because, with respect health insurance issuers, the Departments expect that the majority States will enact laws take other appropriate action resulting their meeting exceeding the Federal standard. general, through section 514, ERISA supersedes State laws the extent that they relate any covered employee benefit plan, and preserves State laws that regulate insurance, banking, securities. While ERISA prohibits States from regulating plan insurance investment company bank, the preemption provisions ERISA section 731 and PHS Act section 2724 (implemented CFR 2590.731(a) and CFR 146.143(a}) apply that the HIP requirements (including those the Affordable Care Act) are not "construed supersede any provision State law which establishes, implements, continues effect any standard requirement solely relating health insurance issuers connection with group health insurance coverage except the extent that such standard requirement prevents the application requirement" federal standard. The conference report accompanying HIPAA indicates that this intended the "narrowest" preemption State laws. (See House Conf. Rep. No. 104736, 205, reprinted 1996 U.S. Code Cong. Admin. News 2018.) States may continue apply State law requirements except the extent that such requirements prevent the application the Affordable Care Act requirements that are the subject this rulemaking. State insurance laws that are more stringent than the Federal requirements are unlikely "prevent the application of' the Affordable Care Act, and preempted. Accordingly, States have significant latitude impose requirements health 

27134 Federal Register/Vol. 75, No. 92/Thursday, May 13, 2010/Rules and Regulations 

insurance issuers that are more 
restrictive than the Federal law. compliance with the requirement Executive Order 13132 that agencies examine closely any policies that may have federalism implications limit the policy making discretion the States, the Departments have engaged efforts consult with and work cooperatively with affected State and local officials, including attending conferences the National Association Insurance Commissioners and consulting with State insurance officials individual basis. expected that the Departments will act similar fashion enforcing the Affordable Care Act requirements. Throughout the process developing these interim final regulations, the extent feasible within the specific preemption provisions HIP applies the Affordable Care Act, the Departments have attempted balance the States' interests regulating health insurance issuers, and Congress' intent provide uniform minimum protections consumers every State. doing so, the Departments' view that they have complied with the requirements Executive Order 13132. 
Pursuant the requirements set forth section 8(a) Executive Order 13132, and the signatures affixed these regulations, the Departments certify that the Employee Benefits Security Administration and the Office Consumer Information and Insurance Oversight have complied with the requirements Executive Order 13132 for the attached regulation meaningful and timely manner. Statutory Authority 
The Department the Treasury temporary regulations are adopted pursuant the authority contained sections 7805 and 9833 the Code. 
The Department Labor interim final regulations are adopted pursuant the authority contained U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 11811183, 1181 note, 1185, 1185 1185b, 1191, 1191a, 1191b, and 1191c; sec. lOl(g), Pub. 104-191, 110 Stat. 1936; sec. 40l(b), Pub. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. 111148, 124 Stat. amended Pub. 111-152, 124 Stat. 1029; Secretary Labor's Order 6-2009, 21524 (May 2009). 
The Department Health and Human Services interim final regulations are adopted pursuant the authority contained sections 2701 through 2763, 2791, and 2792 the PHS Act (42 USC 300gg through 300gg-63, 300gg-91, and 300gg-92), amended. 
List Subjects CFR Part 
Excise taxes, Health care, Health insurance, Pensions, Reporting and recordkeeping requirements. CFR Part 602 
Reporting and recordkeeping requirements. CFR Part 2590 
Continuation coverage, Disclosure, Employee benefit plans, Group health plans, Health care, Health insurance, Medical child support, Reporting and recordkeeping requirements. CFR Parts 144, 146, and 147 
Health care, Health insurance, Reporting and recordkeeping requirements, and State regulation health insurance. 

Steven Miller, 
Deputy Commissioner for Services and Enforcement, Internal Revenue Service. 
Approved: May 2010. 

Michael Mundaca, 
Assistant Secretary the Treasury (Tax Policy). 
Signed this 6th day May 2010. 

Phyllis Borzi, 
Assistant Secretary, Employee Benefits Security Administration, Department Labor. 
Approved: May 2010. 

Jay Angoff, 
Director, Office Consumer Information and Insurance Oversigh 
Approved: May 2010. 

Kathleen Sebelius, 
Secretary, Department Health and Human Services. 

Internal Revenue Service CFR Chapter 
 Accordingly, CFR Parts and 602 are amended follows: 
PART 54-PENSION EXCISE TAXES 

 Paragraph The authority citation for part continues read part follows: 
Authority: U.S.C. 7805.    

 Par. Section 54.9815-2714T added read follows: 
 54.9815-2714T Eligibility children until least age (temporary). 
(a) general-(1) group health plan, health insurance issuer offering group health insurance coverage, that makes available dependent coverage children must make such coverage available for children until attainment years age. 
(2) The rule this paragraph (a) illustrated the following example: 

Example. (i) Facts. For the plan year beginning January 2011, group health plan provides health coverage for employees, employees' spouses, and employees' children until the child turns 26. the birthday child employee, July 17, 2011, the child turns 26. The last day the plan covers the child July 16, 2011. 
(ii) Conclusion. this Example, the plan satisfies the requirement this paragraph (a) with respect the child. 
(b) 
Restrictions plan definition dependent. With respect child who has not attained age 26, plan issuer may not define dependent for purposes eligibility for dependent coverage children other than terms relationship between child and the participant. Thus, for example, plan issuer may not deny restrict coverage for child who has not attained age based the presence absence the child's financial dependency (upon the participant any other person), residency with the participant with any other person, student status, employment, any combination those factors. addition, plan issuer may not deny restrict coverage child based eligibility for other coverage, except that paragraph (g) this section provides special rule for plan years beginning before January 2014 for grandfathered health plans that are group health plans. (Other requirements Federal State law, including section 609 ERISA section 1908 the Social Security Act, may mandate coverage certain children.) 

(c) 
Coverage grandchildren not required. Nothing this section requires plan issuer make coverage available for the child child receiving dependent coverage. 

(d) 
Uniformity irrespective age. The terms the plan health insurance coverage providing dependent coverage children cannot vary based age (except for children who are age older). 

(e) 
Examples. The rules paragraph 

(d) this section are illustrated the following examples: 

Example (i) Facts. group health plan offers choice self-only family health coverage. Dependent coverage provided under family health coverage for children participants who have not attained age 26. The plan imposes additional premium surcharge for children who are older than age 
18. 

(ii) Conclusion. this Example the plan violates the requirement paragraph (d) this section because the plan varies the terms 

Federal Register Vol. 75, No. /Thursday, May 13, 2010/Rules and Regulations 27135 

for dependent coverage children based age. 
Example (i) Facts. group health plan offers choice among the following tiers health coverage: self-only, self-plus-one, selfplus-two, and self-plus-three-or-more. The cost coverage increases based the number covered individuals. The plan provides dependent coverage children who have not attained age 26. 
(ii) 
Conclusion. this Example the plan does not violate the requirement paragraph 

(d) this section that the terms dependent coverage for children not vary based age. Although the cost coverage increases for tiers with more covered individuals, the increase applies without regard the age any child. 

Example (i) Facts. group health plan offers two benefit packages-an HMO option and indemnity option. Dependent coverage provided for children participants who have not attained age 26. The plan limits children who are older than age the HMO option. 
(ii) Conclusion. this Example the plan violates the requirement pagraph (d) this section because the plan, limiting children who are older than age the HMO option, varies the terms for dependent coverage children based age. 
(f) 
Transitional rules for individuals whose coverage ended reason reaching dependent eligibility threshold-(1) general. The relief provided the transitional rules this paragraph (f) applies with respect any child

(i) 
Whose coverage ended, who was denied coverage (or was not eligible for coverage) under group health plan group health insurance coverage because, under the terms the plan coverage, the availability dependent coverage children ended before the attainment age (which, under this section, longer permissible); and 

(ii) 
Who becomes eligible (or required become eligible) for coverage under group health plan group health insurance coverage the first day the first plan year beginning after September 23, 2010 reason the application this section. 

(2) 
Opportunity enroll required. (i) group health plan, group health insurance coverage, which child described paragraph (f)(l) this section eligible enroll (or required become eligible enroll) the plan coverage which the child's coverage ended (or did not begin) for the reasons described paragraph (f)(l)(i) this section, and the plan, the issuer such coverage, subject the requirements this section, the plan and the issuer are required give the child opportunity enroll that continues for least days (including written notice the opportunity enroll). This 

opportunity (including the written notice) must provided beginning not later than the first day the first plan year beginning after September 23, 2010. 
(ii) 
The written notice must include statement that children whose coverage ended, who were denied coverage (or were not eligible for coverage), because the availability dependent coverage children ended before attainment age are eligible enroll the plan coverage. The notice may provided employee behalf the employee's child. addition, the notice may included with other enrollment materials that plan distributes employees, provided the statement prominent. notice satisfying the requirements this paragraph (f)(2) provided employee whose child entitled enrollment opportunity under this paragraph (f), the obligation provide the notice enrollment opportunity under this paragraph (0(2) with respect that child satisfied for both the plan and the issuer. 

(3) 
Effective date coverage. the case individual who enrolls under paragraph (f)(2) this section, coverage must take effect not later than the first day the first plan year beginning after September 23, 2010. 

(4) 
Treatment enrollees group health plan. Any child enrolling group health plan pursuant paragraph (f)(2) this section must treated the child were special enrollee, provided under the rules  54.98016(d). Accordingly, the child (and, the child would not participant once enrolled the plan, the participant through whom the child otherwise eligible for coverage under the plan) must offered all the benefit packages available similarly situated individuals who did not lose coverage reason cessation dependent status. For this purpose, any difference benefits cost-sharing requirements constitutes different benefit package. The child also cannot required pay more for coverage than similarly situated individuals who did not lose coverage reason cessation dependent status. 

(5) 
Examples. The rules this paragraph (f) are illustrated the following examples: 

Example (i) Facts. Employer maintains group health plan with calendar year plan year. The plan has single benefit package. For the 2010 plan year, the plan allows children employees covered under the plan until age 19, until age for children who are full-time students. Individual employee and Individual B's child and full-time student, were enrolled Y's group health plan the beginning the 2010 plan year. June 10, 2010, turns years old and loses dependent coverage under Y's plan. before January 201 Y's group health plan gives written notice that individuals who lost coverage reason ceasing dependent before attainment age are eligible enroll the plan, and that individuals may request enrollment for such children through February 14, 2011 with enrollment effective retroactively January 2011. 
(ii] Conclusion. this Example the plan has complied with the requirements this paragraph (f) providing enrollment opportunity that lasts least days. 
Example (i) Facts. Employer maintains group health plan with plan year beginning October and ending September 
30. Prior October 2010, the group health plan allows children employees covered under the plan until age 22. Individual employee and Individual D's child, are enrolled family coverage under Z's group health plan for the plan year beginning October 2008. May 2009, turns years old and ceases eligible dependent under Z's plan and loses coverage. drops coverage but remains employee 

(ii) Conclusion this Example not later than October 2010, the plan must provide and opportunity enroll (including written notice opportunity enroll) that continues for least days, with enrollment effective not later than October 2010. 
Example (i) Facts. Same facts Example except that did not drop coverage. Instead, switched lower-cost benefit package option, 
(ii) Conclusion this Example not later than October 2010, the plan must provide and opportunity enroll any benefit package available similarly situated individuals who enroll when first eligible. 
Example (i) Facts. Same facts Example except that elected COBRA continuation coverage. 
(ii) Conclusion. this Example not later than October 2010, the plan must provide and opportunity enroll other than COBRA qualified beneficiary (and must provide, that date, written notice the opportunity enroll) that continues for least days, with enrollment effective not later than October 2010. 
Example (i) Facts. Employer maintains group health plan with calendar year plan year. Prior 2011, the plan allows children employees covered under the plan until the child attains age 22. During the 2009 plan year, individual with 22-year old child joins the plan; the child denied coverage because the child 22. 
(ii) Conclusion. this Example notwithstanding that the child was not previously covered under the plan, the plan must provide the child, not later than January 2011, opportunity enroll (including written notice the employee opportunity enroll the child) that continues for least days, with enrollment effective not later than January 201 
(g) Special rule for grandfathered group health plans-(1) For plan years 

27136 Federal Register /Vol. 75, No. /Thursday, May 13, 2010 Rules and Regulations 
beginning before January 2014, group health plan that qualifies grandfathered health plan under section 

1251 the Patient Protection and Affordable Care Act and that makes available dependent coverage children may exclude adult child who has not attained age from coverage only the adult child eligible enroll eligible employer-sponsored health plan (as defined section 5000A(0(2)) other than group health parent. 
(2) 
For plan years after January 2014, group health plan that qualifies grandfathered health plan under section 1251 the Patient Protection and Affordable Care Act must comply with the requirements paragraphs (a) through this section. 

(h) 
Applicability date. The provisions this section apply for plan years beginning after September 23, 2010. 

(i) 
Expiration date. This section expires before May 13, 2013. 

PART 602-0MB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT 
 Par. The authority citation for part 602 continues read follows: 
Authority: U.S.C. 7805. 
 Par.  602.101, paragraph (b) amended adding the following entry numerical order the table: 
602.101 OMB Control numbers. 
(b) 
CFR part section where Current OMB identified and descri bed control No. 
54.9815--2714T ....................... 1545--2172 

Employee Benefits Security Administration CFR Chapter XXV 
PART 2590-RULES AND 
REGULATIONS FOR GROUP HEAL PLANS 
 The authority citation for Part 2590 revised read follows: 
Authority: U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; sec. 101[g), Pub. L.104-191, 110 Stat. 1936; sec. 401(b). Pub. 105-200, 112 Stat. 

645 (42 U.S.C. 651 note); sec. 512(d), Pub. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. 111-148, 124 Stat. 119, amended Pub. 111-152, 124 Stat. 1029; Secretary Labor's Order 6-2009, 21524 (May 2009). 
 Section 2590.715-2714 added Subpart read follows: 
 2590.71 5-271 Eliglbility children until least age 26. 
(a) general-(1) group health plan, health insurance issuer offering group health insurance coverage, that makes available dependent coverage children must make such coverage available for children until attainment years age. 

(2) 
The rule this paragraph (a) illustrated the following example: 

Example. (i) Facts. For the plan year beginning January 2011, group health plan provides health coverage for employees, employees' spouses, and employees' children 
until the child turns 26. the child employee, July 17, 2011, child turns 26. The last day the plan covers the child July 16, 2011. 
(ii) Conclusion. this Example, the plan satisfies the requirement this paragraph (a) with respect the child. 
(b) Restrictions plan definition dependent. With respect child who has not attained age 26, plan issuer may not define dependent for purposes eligibility for dependent coverage children other than terms relationship between child and the participant. Thus, for example, plan issuer may not deny restrict coverage for child who has not attained age based the presence absence the child's financial dependency (upon the participant any other person), residency with the participant with any other person, student status, employment, any combination those factors. addition, plan issuer may not deny restrict coverage child based eligibility for other coverage, except that paragraph (g) this section provides special rule for plan years beginning before January 2014 for grandfathered health plans that are group health plans. (Other requirements Federal State law, 
including section 609 ERISA section 1908 the Social Security Act, may mandate coverage certain children.) 
(c) 
Coverage grandchildren not required. Nothing this section requires plan issuer make coverage available for the child child receiving dependent coverage. 

(d) 
Uniformity irrespective age. The terms the plan health insurance coverage providing dependent coverage children cannot vary based age 

(except for children who are age older). 
(e) 
Examples. The rules paragraph 

(d) this section are illustrated the following examples: 

Example (i) Facts. group health plan offers choice self-only family health coverage. Dependent coverage provided under family health coverage for children participants who have not attained age 26. The plan imposes additional premium surcharge for children who are older than age 
18. 
(ii) Conclusion. this Example the plan violates the requirement paragraph (d) this section because the plan varies the terms for dependent coverage children based age. 
Example (i) Facts. group health plan offers choice among the following tiers health coverage: self-only, self-plus-one, selfplus-two, and self-plus-three-or-more. The cost coverage increases based the number covered individuals. The plan provides dependent coverage children who have not attained age 26. 
(ii) 
Conclusion. this Example the plan does not violate the requirement paragraph 

(d) this section that the terms dependent coverage for children not vary based age. Although the cost coverage increases for tiers with more covered individuals, the increase applies without regard the age any child. 

Example (i) Facts. group health plan offers two benefit packages-an HMO option and indemnity option. Dependent coverage provided for children participants who have not attained age 26. The plan limits children who are older than age the HMO option. 

(ii) 
Conclusion. this Example the plan violates the requirement paragraph (d) this section because the plan, limiting children who are older than age the HMO option, varies the terms for dependent coverage children based age. 

(f) Transitional rules for individuals whose coverage ended reason reaching dependent eligibility threshold-(1) general. The relief provided the transitional rules this paragraph (f) applies with respect any child
(i) 
Whose coverage ended, who was denied coverage (or was not eligible for coverage) under group health plan group health insurance coverage because, under the terms the plan coverage, the availability dependent coverage children ended before the attainment age (which, under this section, longer permissible); and 

(ii) 
Who becomes eligible (or required become eligible) for coverage under group health plan group health insurance coverage the first day the first plan year beginning after September 
23, 2010 reason the this section. 

(2) enroll required-(i) group health plan, group health 

Federal Register /Vol. 75, No. /Thursday, May 13, 2010/Rules and Regulations 27137 

insurance coverage, which child described paragraph (f1(1) this section eligible enroll (or required become eligible enroll) the plan coverage which the child's coverage ended (or did not begin)



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