Internal Revenue Bulletin 2013-31 (PDF rendition): IRS Notices

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Bulletin No. 201
3-31
July 29, 2013
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Notice 2013–43, page 113.
This notice provides: (i) revised timelines for implementation of
the requirements of sections 1471 through 1474 of the Code,
commonly referred to as the Foreign Account Tax Compliance
Act, or FATCA; and (ii) additional guidance concerning the treat-
ment of financial institutions located in jurisdictions that have
signed intergovernmental agreements for the implementation
of FATCA (IGAs) but have not yet brought those IGAs into force.
The Department of the Treasury (Treasury) and the Internal Rev-
enue Service (IRS) intend to amend the regulations under sec-
tions 1471 through 1474 to adopt these rules. Prior to the
effective date of those amendments, taxpayers may rely on
the provisions of this notice.
Notice 2013–47, page 120.
This notice amplifies the relief provided by Notices 2013–39
and 2013–40. Those Notices provided temporary relief from
certain limitations on low-income housing projects financed
with tax-exempt bonds under § 142(d) and LIHTCs under § 42,
respectively, to permit such projects to house individuals dis-
placed by severe storms and tornadoes occurring in Oklahoma
between May 18 and May 27, 2013. Following the release
of those Notices, FEMA extended the period during which the
disasters occurred to June 2, 2013, and added flooding to
the list of disasters covered. This Notice makes the same
changes to Notices 2013–39 and 2013–40.
Notice 2013–48, page 120.
This notice provides a proposed revenue procedure that would
establish ade minimisexception to the wash sale rules of sec-
tion 1091 of the Code for certain redemptions of shares of
money market funds that, under regulations proposed by the
Securities and Exchange Commission, would no longer main-
tain a constant share price. Comments requested by October
28, 2013.
EMPLOYEE PLANS
T.D. 9624, page 86.
These final regulations provide guidance on coverage of cer-
tain preventive services. They provide an exemption for reli-
gious employers from the coverage of contraceptive services
requirement under section 2713 of the Public Health Service
Act, incorporated into the Code by section 9815. The rules
also establish accommodations for nonprofit organizations that
do not meet the definition of religious employer but have a re-
ligious objection to providing coverage of contraceptive ser-
vices.
Notice 2013–46, page 117.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in July 2013; the
24-month average segment rates; the funding segment rates
applicable for July 2013; and the minimum present value rates
for June 2013. The rates in this notice reflect certain changes
implemented by the Moving Ahead for Progress in the 21st
Century Act, Public Law 112-141 (MAP–21).
(Continued on the next page)
Fi
nding Lists begin on page ii.
Index for July begins on page iv.

EXCISE TAX
T.D. 9624, page 86.
These final regulations provide guidance on coverage of cer-
tain preventive services. They provide an exemption for reli-
gious employers from the coverage of contraceptive services
requirement under section 2713 of the Public Health Service
Act, incorporated into the Code by section 9815. The rules
also establish accommodations for nonprofit organizations that
do not meet the definition of religious employer but have a re-
ligious objection to providing coverage of contraceptive ser-
vices.
Notice 2013–45, page 116.
This notice provides transition relief for 2014 from the infor-
mation reporting requirements under sections 6055 and 6056
of the Code and from the employer shared responsibility provi-
sions under section 4980H of the Code.
July 29, 20132013–31 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the poli
cy of the Service to publish in the Bulletin all sub-
stantive ru
lings necessary to promote a uniform application of
the tax laws
, including all rulings that supersede, revoke, mod-
ify, or amen
d any of those previously published in the Bulletin.
All publish
ed rulings apply retroactively unless otherwise indi-
cated. Pro
cedures relating solely to matters of internal man-
agement ar
e not published; however, statements of internal
practices
and procedures that affect the rights and duties of
taxpayers
are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The cont
ents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
2013–31 I.R.B.July 29, 2013

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 9815.—Additional
Market Reforms
T.D. 9624
DEPARTM
ENT OF THE
TREASUR
Y
Interna
l Revenue Service
26 CFR P
art 54
DEPAR
TMENT OF LABOR
Emplo
yee Benefits Security
Admi
nistration
29 CF
R Parts 2510 and 2590
DEP
ARTMENT OF HEALTH
AND
HUMAN SERVICES
45
CFR Parts 147 and 156
Coverage of Certain
Preventive Services Under the
Affordable Care Act
AGENCIES:Internal Revenue Service,
Department of the Treasury; Employee
Benefits Security Administration, Depart-
ment of Labor; Centers for Medicare &
Medicaid Services, Department of Health
and Human Services.
A
CTION:Final rules.
SUMMARY:This document contains
final regulations regarding coverage of
certain preventive services under section
2713 of the Public Health Service Act
(PHS Act), added by the Patient Protec-
tion and Affordable Care Act, as amended,
and incorporated into the Employee Re-
tirement Income Security Act of 1974 and
the Internal Revenue Code. Section 2713
of the PHS Act requires coverage without
cost sharing of certain preventive health
services by non-grandfathered group
health plans and health insurance cover-
age. Among these services are women’s
preventive healthservices, as specified
in guidelines supported by the Health
Resources and Services Administration
(HRSA). As authorized by the current
regulations, and consistent with the HRSA
guidelines, group health plans established
or maintained by certain religious employ-
ers (and group health insurance coverage
provided in connection with such plans)
are exempt from the otherwise applicable
requirement to covercertain contraceptive
services. These final regulations simplify
and clarify the religious employer exemp-
tion. These final regulations also establish
accommodations withrespect to the con-
traceptive coverage requirement for group
health plans established or maintained by
eligible organizations (and group health
insurance coverage provided in connec-
tion with such plans), as well as student
health insurance coverage arranged by
eligible organizations that are institutions
of higher education. These regulations
also finalize related amendments to regu-
lations concerning Affordable Insurance
Exchanges.
DATES:Effective date: These final regu-
lations are effective on August 1, 2013.
Applicability date: With the exception
of the amendments to the religious em-
ployer exemption, which apply to group
health plans and health insurance issuers
for plan years beginning on or after Au-
gust 1, 2013, these final regulations apply
to group health plans and health insurance
issuers for plan years beginning on or after
January 1, 2014.
FOR FURTHER INFORMATION
CONTACT:For inquiries related to the
religious employer exemption and eligi-
ble organization accommodations: Jacob
Ackerman, Centers for Medicare & Med-
icaid Services (CMS), Department of
Health and Human Services (HHS), at
(410) 786–1565; Amy Turner or Beth
Baum, Employee Benefits Security Ad-
ministration (EBSA), Department of La-
bor, at (202) 693–8335; Karen Levin,
Internal Revenue Service (IRS), Depart-
ment of the Treasury, at (202) 927–9639.
For matters related to the Federally-fa-
cilitated Exchange user fee adjustment:
Ariel Novick, CMS, HHS, at (301)
492–4309.Customer Service Informa-
tion: Individuals interested in obtaining
information from the Department of La-
bor concerning employment-based health
coverage laws may call the EBSA toll-free
hotline at 1–866–444–EBSA (3272) or
visit the Department of Labor’s web site
(www.dol.gov/ebsa). Information from
HHS on private health insurance cov-
erage can be found on CMS’s web site
(www.cms.gov/cciio), and information
on health care reform can be found at
www.HealthCare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted
on March 23, 2010. The Health Care
and Education Reconciliation Act of 2010
(Pub. L. 111–152) was enacted on March
30, 2010. These statutes are collectively
known as the Affordable Care Act. The
Affordable Care Act reorganizes, amends,
and adds to the provisions of part A of ti-
tle XXVII of the Public Health Service Act
(PHS Act) relating to group health plans
and health insurance issuers in the group
and individual markets. The Affordable
Care Act adds section 715(a)(1) to the Em-
ployee Retirement Income Security Act of
1974 (ERISA) and section 9815(a)(1) to
the Internal Revenue Code (Code) to in-
corporate the provisions of part A of title
XXVII of the PHS Act into ERISA and
the Code, and to make them applicable to
group health plans and health insurance
issuers providing health insurance cover-
age in connection with group health plans.
The sections of the PHS Act incorporated
into ERISA and the Code are sections 2701
through 2728.
Section 2713(a)(4) of the PHS Act, as
addedbytheAffordableCareActand
incorporated into ERISA and the Code,
requires that non-grandfathered group
health plans and health insurance issuers
offering non-grandfathered group or indi-
vidual health insurance coverage provide
benefits for certain women’s preventive
health services without cost sharing, as
provided for in comprehensive guidelines
supported by the Health Resources and
Services Administration (HRSA). On Au-
gust 1, 2011, HRSA adopted and released
guidelines for women’s preventive health
services (HRSA Guidelines) based on rec-
ommendations of the independent Institute
2013–31 I.R.B.86July 29, 2013

of Medicine. As relevant here, the HRSA
Guidelines include all Food and Drug
Administration (FDA)-approved contra-
ceptive methods, sterilization procedures,
and patient education and counseling
for women with reproductive capacity,
as prescribed by a health care provider
(collectively, contraceptive services).
1
Except as discussed later in this section,
non-grandfathered group health plans and
health insurance coverage are required
to provide coverage consistent with the
HRSA Guidelines without cost sharing
for plan years (in the individual market,
policy years) beginning on or after August
1, 2012.
2
Interim final regulations implementing
section 2713 of the PHS Act were pub-
lished on July 19, 2010 (75 FR 41726)
(2010 interim final regulations). On Au-
gust 1, 2011, the Departments of Health
and Human Services (HHS), Labor, and
the Treasury (collectively, the Depart-
ments) amended the 2010 interim final
regulations to provide HRSA with author-
ity that would effectively exempt group
health plans established or maintained by
certain religious employers (and group
health insurance coverage provided in
connection with such plans) from the re-
quirement to cover contraceptive services
consistent with the HRSA Guidelines (76
FR 46621) (2011 amended interim fi-
nal regulations), and, on the same date,
HRSA exercised this authority in the
HRSA Guidelines such that group health
plans established or maintained by these
religious employers (and group health
insurance coverage provided in connec-
tion with such plans) are exempt from the
requirement to cover contraceptive ser-
vices.
3
The 2011 amended interim final
regulations specified that, for purposes of
this exemption, a religious employer is
one that: (1) has the inculcation of reli-
gious values as its purpose; (2) primarily
employs persons who share its religious
tenets; (3) primarily serves persons who
share its religious tenets; and (4) is a non-
profit organization described in section
6033(a)(1) and (a)(3)(A)(i) or (iii) of the
Code. Section 6033(a)(3)(A)(i) and (iii)
of the Code refers to churches, their in-
tegrated auxiliaries, and conventions or
associations of churches, as well as to
the exclusively religious activities of any
religious order. Final regulations issued
on February 10, 2012, adopted the defi-
nition of religious employer in the 2011
amended interim final regulations without
modification (2012 final regulations).
4
Contemporaneous with the issuance of
the 2012 final regulations, HHS, with the
agreement of the Departments of Labor
and the Treasury, issued guidance estab-
lishing a temporary safe harbor from en-
forcement of the contraceptive coverage
requirement by the Departments for group
health plans established or maintained by
certain nonprofit organizations with reli-
gious objections to contraceptive coverage
(and group health insurance coverage pro-
vided in connection with such plans).
5
The
guidance provided that the temporary en-
forcement safe harbor would remain in ef-
fect until the first plan year beginning on
or after August 1, 2013. The Departments
committed to rulemaking during the 1-year
safe harbor period to ensure more women
broad access to recommended preventive
services, including contraceptive services,
without cost sharing, while simultaneously
protecting certain additional nonprofit re-
ligious organizations with religious objec-
tions to contraceptive coverage from hav-
ing to contract, arrange, pay, or refer for
such coverage.
On March 21, 2012, the Departments
published an advance notice of proposed
rulemaking (ANPRM) that described
and solicited comments on possible ap-
proaches to achieve these goals (77 FR
16501).
On February 6, 2013, following review
of the comments on the ANPRM, the De-
partments published proposed regulations
at 78 FR 8456 (proposed regulations). The
regulations proposed to simplify and clar-
ify the definition of religious employer for
purposes of the religious employer exemp-
tion. The regulations also proposed ac-
commodations for health coverage estab-
lished or maintained or arranged by certain
nonprofit religious organizations with re-
ligious objections to contraceptive cover-
age. These organizations were referred to
as eligible organizations.
The regulations proposed that, in the
case of an insured group health plan es-
tablished or maintained by an eligible
organization, the health insurance issuer
providing group health insurance cover-
age in connection with the plan would
be required to assume sole responsibility,
independent of the eligible organization
and its plan, for providing contraceptive
coverage to plan participants and bene-
ficiaries without cost sharing, premium,
fee, or other charge to plan participants or
beneficiaries or to the eligible organization
or its plan. The Departments proposed a
comparable accommodation with respect
to insured student health insurance cover-
age arranged by eligible organizations that
are institutions of higher education.
In the case of a self-insured group
health plan established or maintained by
an eligible organization, the proposed reg-
ulations presented potential approaches
under which the third party administrator
of the plan would arrange for a health
insurance issuer to provide contraceptive
coverage to plan participants and benefi-
ciaries without cost sharing, premium, fee,
or other charge to plan participants or ben-
eficiaries or to the eligible organization or
its plan. An issuer (or its affiliate) would
1
The HRSA Guidelines exclude services relating to a man’sreproductive capacity, such as vasectomies and condoms.
2
Interim final regulations published by the Departments on July 19, 2010, generally provide that plans and issuers must cover a newly recommended preventive service starting with the first
plan year (in the individual market, policy year) that begins on or after the date that is one year after the date on which the new recommendation is issued. 26 CFR 54.9815–2713T(b)(1); 29
CFR 2590.715–2713(b)(1); 45 CFR 147.130(b)(1).
3
The 2011 amended interim final regulations were issued and effective on August 1, 2011, and published on August 3, 2011 (76 FR 46621).
4
The 2012 final regulations were published on February 15, 2012 (77 FR 8725).
5
Guidance on the Temporary Enforcement Safe Harborfor Certain Employers, Group Health Plans, and Group Health Insurance Issuers with Respect to the Requirement to Cover Contra-
ceptive Services Without Cost Sharing Under Section 2713 of the Public Health Service Act, Section 715(a)(1) of the Employee Retirement Income Security Act, and Section 9815(a)(1)
of the Internal Revenue Code, issued on February 10,2012, and reissued on August 15, 2012. Available at:http://www.cms.gov/CCIIO/Resources/Files/Downloads/prev-services-guid-
ance–08152012.pdf. The guidance, as reissued on August 15, 2012, clarifies, among other things, that plans that took some action before February 10, 2012, to try, without success, to exclude
or limit contraceptive coverage are not precluded from eligibility for the safe harbor. The temporary enforcement safe harbor is also available to insured student health insurance coverage
arranged by nonprofit institutions of higher education with religious objections to contraceptive coverage that meet the conditions set forth in the guidance.Seefinal rule entitled “Student
Health Insurance Coverage” published March 21, 2012 (77 FR 16457).
July 29, 2013872013–31 I.R.B.

be able to offset the costs incurred by the
third party administrator and the issuer in
the course of arranging and providing such
coverage by claiming an adjustment in the
Federally-facilitated Exchange (FFE) user
fee.
The Departments received over
400,000 comments (many of them stan-
dardized form letters) in response to the
proposed regulations. After consideration
of the comments, the Departments are
publishing these final regulations. With
the exception of the amendments to the
religious employer exemption, which ap-
ply to group health plans and group health
insurance issuers for plan years beginning
on or after August 1, 2013, these final reg-
ulations apply to group health plans and
health insurance issuers for plan years be-
ginning on or after January 1, 2014, which
is when the majority of plan years begin.
6
,
7
Contemporaneously issued amendments
to the HRSA Guidelines implementing
the simplified and clarified religious em-
ployer exemption authorized by 45 CFR
147.131(a) of these final regulations will
be effective on August 1, 2013.
Two additional guidance documents
are being issued contemporaneously with
these final regulations. First, HHS is is-
suing guidance extending the temporary
safe harbor from enforcement of the con-
traceptive coverage requirement by the
Departments to encompass plan years be-
ginning on or after August 1, 2013, and
before January 1, 2014. This guidance
continues to include a form to be used
by an organization during this temporary
period to self-certify that its plan qualifies
for the temporary enforcement safe har-
bor. Second, as described in more detail
later in this preamble, HHS and DOL are
also issuing a self-certification form to be
executed by an organization seeking to be
treated as an eligible organization for pur-
poses of an accommodation under these
final regulations. This self-certification
form is applicable in conjunction with the
accommodations underthese final regula-
tions (that is, for plan years beginning on
or after January 1, 2014), after the expi-
ration of the temporary enforcement safe
harbor.
II. Overview of the Final Regulations
These final regulations promote two
important policy goals. First, the reg-
ulations provide women with access to
contraceptive coverage without cost shar-
ing, thereby advancing the compelling
government interests in safeguarding pub-
lic health and ensuring that women have
equal access to health care. Second, the
regulations advance these interests in a
narrowly tailored fashion that protects cer-
tain nonprofit religious organizations with
religious objections to providing contra-
ceptive coverage from having to contract,
arrange, pay, or refer for such cover-
age. The regulations finalize the general
approach described in the proposed regu-
lations, with modifications in response to
comments that are intended primarily to
simplify administration of the policy.
Section 2713 of the PHS Act reflects
a determination by Congress that cover-
age of recommended preventive services
without cost sharing by non-grandfathered
group health plans andhealth insurance
coverage is necessary to achieve access
to basic health care for more Americans.
Individuals are more likely to use pre-
ventive services if they do not have to
satisfy cost-sharing requirements (such
as a copayment, coinsurance, or a de-
ductible). Use of preventive services re-
sults in a healthier population and reduces
health care costs by helping individuals
avoid preventableconditions and receive
treatment earlier.
8
Further, Congress, by
amending the Affordable Care Act during
Senate consideration of the bill to ensure
that recommended preventive services for
women would be covered adequately by
non-grandfathered group health plans and
health insurance coverage, recognized that
women have unique health care needs.
9
Such needs include contraceptive ser-
vices.
10
Some commenters asserted that contra-
ceptive services should not be considered
preventive health services, arguing that
they do not prevent disease and have been
shown by some studies to be harmful to
women’s health. The HRSA Guidelines
are based on recommendations of the in-
dependent Institute of Medicine (IOM),
which undertook a review of the scien-
tific and medical evidence on women’s
preventive services. As documented in
the IOM report, “Clinical Preventive Ser-
vices for Women: Closing the Gaps,”
women experiencing an unintended preg-
nancy may not immediately be aware that
they are pregnant, and thus delay prenatal
care. They also may be less motivated to
cease behaviors during pregnancy, such
as smoking and consumption of alcohol,
that pose pregnancy-related risks. Studies
show a greater risk of preterm birth and
low birth weight among unintended preg-
nancies.
11
In addition, contraceptive use
helps women improve birth spacing and
therefore avoid the increased risk of ad-
verse pregnancy outcomes that comes with
pregnancies that are too closely spaced.
Short interpregnancy intervals in partic-
ular have been associated with low birth
weight, prematurity, and small-for-ges-
6
Section 2713(b) of the PHS Act and the companion provisions of ERISA and the Code provide that the Secretary shall establish an interval of not less thanone year between when new
recommendations or guidelines under PHS Act section 2713(a) are issued and the first plan year (in the individual market, policy year) for which coverage of services addressed in such
recommendations or guidelines must be in effect. Under the 2010 interim final regulations, the requirement on a non-exempt, non-grandfathered group health plan or group or individual
health insurance policy to cover a newly recommended preventive service without cost sharing takes effect starting with the first plan year (in the individual market, policy year) that begins
on or after the date that is one year after the new recommendation is issued. 26 CFR 54.9815–2713T(b)(1); 29 CFR 2590.715–2713(b)(1); 45 CFR 147.130(b)(1). In the case of contraceptive
services, this 1-year period ended on August 1, 2012, because the HRSA Guidelines including such services were issued on August 1, 2011. These final regulations do not alter this effective
date.
7
This estimate is based on the Department of Labor’s analysis of Form 5500 data.
8
Institute of Medicine,Clinical Preventive Services for Women: Closing the Gaps, Washington, DC: National Academy Press, 2011, at p. 16.
9
S.Amdt. 2791 to S.Amdt. 2786 to H.R. 3590 (Service Members Home Ownership Tax Act of 2009), December 3, 2009.
10
Institute of Medicine,Clinical Preventive Services for Women: Closing the Gaps, Washington. DC: National Academy. Press, 2011, at p. 9;see alsoSonfield, A., The Case for Insurance
Coverage of Contraceptive Services and Supplies Without Cost Sharing, 14Guttmacher Policy Review. 10 (2011), available atwww.guttmacher.org/pubs/gpr/14/1/gpr140107.html.See also
Congressional Record, S12025 (Dec. 1, 2009), S12114, S12271, S12277 (December 3, 2009) (statements of Senators B. Boxer, D. Feinstein, A. Franken, and B. Nelson, respectively).
11
Gipson, J.D., et al., The Effects of Unintended Pregnancy on Infant, Child and Parental Health: A Review of the Literature,Studies on Family Planning, 2008, 39(1):18–38.
2013–31 I.R.B.88July 29, 2013

tational age births.
12
Contraceptives also
have medical benefits for women who are
contraindicated for pregnancy, and there
are demonstrated preventive health bene-
fits from contraceptives relating to condi-
tions other than pregnancy (for example,
prevention of certain cancers, menstrual
disorders, and acne).
13
In addition, by
reducing the number of unintended preg-
nancies, contraceptives reduce the number
of women seeking abortions.
14
It is for
a woman and her health care provider in
each particular case to weigh any risks
against the benefits in deciding whether
to use contraceptive services in general or
any particular contraceptive service.
Covering contraceptives also yields
significant cost savings. A 2000 study
estimated that it would cost 15 to 17 per-
cent more not to provide contraceptive
coverage in employee health plans than
to provide such coverage, after account-
ing for both the direct medical costs of
pregnancy and the indirect costs, such as
employee absence.
15
Consistent with this
finding, when contraceptive coverage was
added to the Federal Employees Health
Benefits Program, premiums did not in-
crease because there was no resulting net
health care cost increase.
16
Specific to
public financing of contraceptive services,
a 2010 analysis projected that expanding
access to family planning services un-
der Medicaid saves $4.26 for every $1
spent.
17
Additional research arrived at a
similar conclusion and found that, in total,
services provided at publicly funded fam-
ily planning centers saved $5.1 billion in
2008.
18
Further, the importance of covering
contraceptive services has been recog-
nized by many states, issuers, and employ-
ers. Twenty-eight states now have laws
requiring health insurance issuers to cover
contraceptives.
19
A 2002 study found that
more than 89 percent of insured plans cov-
ered contraceptives.
20
And a 2010 survey
of employers revealed that 85 percent of
large employers and 62 percent of small
employers offered coverage of FDA-ap-
proved contraceptives, with another 32
percent of small employers reporting that
they did not know whether they did so.
21
Furthermore, in directing non-grandfa-
thered group health plans and health in-
surance coverage to cover preventive ser-
vices and screenings for women described
in HRSA Guidelines without cost sharing,
the statute acknowledges that both existing
health coverage and existing preventive
services recommendations often did not
adequately serve the unique health needs
of women. This disparity placed women in
the workforce at a disadvantage compared
to their male coworkers. Research shows
that access to contraception improves the
social and economic status of women.
22
Research also shows that cost sharing can
be a significant barrier to access to contra-
ception.
23
As IOM noted, women use pre-
ventive services morethan men, generat-
ing significant out-of-pocket expenses for
women.
24
Thus, eliminating cost sharing is
particularly critical to addressing the gen-
der disparity of concern here.
The Departments aim to advance these
compelling public health and gender eq-
uity interests by providing more women
broad access to recommended preventive
services, including contraceptive services,
without cost sharing, while simultaneously
protecting certain nonprofit religious orga-
nizations with religious objections to con-
traceptive coverage from having to con-
tract, arrange, pay, or refer for such cov-
erage, as described in these final regula-
tions. Moreover, through these final reg-
ulations, the Departments seek to achieve
these goals in ways that take into account
the responsibilities imposed on health in-
surance issuers and third party administra-
tors.
A. Amendments to Coverage of
Recommended Preventive Health Services
—26 CFR 54.9815–2713, 29 CFR
2590.715–2713, 45 CFR 147.130
These sections of the final regulations
finalize technical amendments to the ex-
12
Conde-Aguledo, A., et al., Birth Spacing and Risk of Adverse Perinatal Outcomes — A Meta-Analysis,Journal of the American Medical Association, 295(15):1809–1823 (2006);see also
Zhu, B., Effect of Interpregnancy Interval on Birth Outcomes: Findings from Recent U.S. Studies,International Journal of Gynecology & Obstetrics, 89:S25–S33 (2005); Fuentes-Afflick,
E., & Hessol, N., Interpregnancy Interval and the Risk of Premature Infants,Obstetrics & Gynecology, 95(3):383–390 (2000).
13
Instute of Medicine,Clinical Preventive Services for Women: Closing the Gaps, Washington, DC: National Academy Press, 2011, at p. 107.
14
Institute of Medicine,Clinical Preventive Services for Women: Closing the Gaps, Washington, DC: National Academy Press, 2011, at p. 105. See also, Peipert, J., et al., Preventing
U
nintended Pregnancies by Providing No-Cost Contraception,Obstetrics & Gynecology, 120(6): 1291–1297 (2012);see alsoBongaarts, J., & Westoff, C., The Potential Role of Contraception
i
n Reducing Abortion,Studies in Family Planning, 31(3): 193–202 (2000).
15
Testimony of Guttmacher Inst., submitted to the Comm. on Preventive Servs. for Women, Institute of Medicine, January 12, 2012, p. 11, citing Bonoan, R. & Gonen, J.S., Promoting
Healthy Pregnancies: Counseling and Contraception as the First Step, Washington Business Group on Health, Family Health in Brief, Issue No. 3. August 2000;see alsoSonfield, A., The
Case for Insurance Coverage of Contraceptive Services and Supplies Without Cost Sharing, 14
Guttmacher Pol’y Rev.10 (2011); Mavranezouli, I., Health Economics of Contraception, 23Best Practice & Res. Clinical Obstetrics & Gynecology187–198 (2009); Trussell, J., et al., Cost
Effectiveness of Contraceptives in the United States, 79Contraception5–14 (2009); Trussell, J., The Cost of Unintended Pregnancy in the United States, 75Contraception168–170 (2007).
16
Dailard, C., Special Analysis: The Costof Contraceptive Insurance Coverage,Guttmacher Rep. on Public Policy(March 2003).
17
Sawhill, R., et al., An Ounce of Prevention: Policy Prescriptions to Reduce the Prevalence of Fragile Families,Future of Children, 20(2): 133–155.
18
Frost, J., et al., Contraceptive Needs and Services, National and State Data, 2008 Update, New York: Guttmacher Institute (2010).
19
Sonfield, A., et al., U.S. Insurance Coverage of Contraceptives and the Impact of Contraceptive Coverage Mandates,Perspectives on Sexual and Reproductive Health36(2):72–79, 2002.
20
Sonfield, A., et al., U.S. Insurance Coverage of Contraceptives and the Impact of Contraceptive Coverage Mandates,Perspectives on Sexual and Reproductive Health36(2):72–79, 2002.
21
Claxton, G., et al.,Employer Health Benefits: 2010 Annual Survey, Menlo Park, Cal.: Kaiser Family Found. & Chicago, Illinois: Health Research & Education Trust, 2010. While
many employers included contraceptivecoverage in their group health plans prior to the Affordable Care Act, the Departments note that the contraceptive coverage requirement promotes the
government’s interests with respect to even these plans’ participants andbeneficiaries by ensuring that these plans cover contraceptive serviceswithout cost sharing, a significant financial
barrier to such services that was prevalent before the contraceptive coverage requirement. Institute of Medicine,Clinical Preventive Services for Women: Closing the Gaps, Washington, DC:
National Academy Press, 2011, at p. 107.See alsoPostlethwaite, D., et al., A Comparison of Contraceptive Procurement Pre- and Post-Benefit Change, 76Contraception360 (2007).
22
Testimony of Guttmacher Institute, submitted to the Comm. on Preventive Services for Women, Institute of Medicine, January 12, 2012, p. 6, citing Goldin, C. & Katz, L., Career and
Marriage in the Age of the Pill,American Economic Review, 2000, 90(2):461–465; Goldin, C. & Katz, L.F., The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage
Decisions,Journal of Political Economy, 2002, 110(4):730–770; Bailey, M.J., More Power to the Pill: The Impact of Contraceptive Freedom on Women’s Life Cycle Labor Supply,Quarterly
Journal of Economics, 2006, 121(1):289–320.
23
Postlethwaite, D., et al., A Comparison of Contraceptive Procurement Pre- and Post-Benefit Change, 76Contraception360 (2007).
24
Institute of Medicine,Clinical Preventive Services for Women: Closing the Gaps, Washington, DC: National Academy Press, 2011, p. 19.
July 29, 2013892013–31 I.R.B.

isting preventive services coverage regu-
lations as proposed. The final regulations
amend paragraph (a) of the existing regu-
lations so that the general requirement to
provide coverage forrecommended pre-
ventive services without cost sharing is
subject to the religious employer exemp-
tion and eligible organization accommoda-
tions discussed later in this section.
The regulations also finalize proposed
amendments to paragraph (a)(1)(iv) of the
existing regulations. As amended, the au-
thorization for HRSA to exempt religious
employers from the contraceptive cover-
age requirement and the definition of re-
ligious employer are now located in new
45 CFR 147.131(a) of the HHS regulation
and incorporated by reference in the reg-
ulations of the Departments of Labor and
the Treasury.
There are no other changes to the provi-
sions of the 2010 interim final regulations
related to providing coverage for recom-
mended preventive services without cost
sharing. Accordingly, consistent with the
general rules for the provision of cover-
age for recommended preventive services
without cost sharingset forth in the 2010
interim final regulations, nothing prevents
a plan or issuer from using reasonable
medical management techniques to deter-
mine the frequency, method, treatment,
or setting for an item or service to the
extent not specified in a recommendation
or guideline and nothing requires a plan
or issuer that has a network of health care
providers to provide benefits or eliminate
cost sharing for items or services that are
delivered out-of-network.
25
B. Religious Employer Exemption
and Accommodations for Health
Coverage Established or Maintained or
Arranged by Eligible Organizations–26
CFR 54.9815–2713A, 29 CFR
2590.715–2713A, 45 CFR 147.131
These sections of the final regula-
tions simplify and clarify the criteria for
the religious employer exemption from
the contraceptive coverage requirement.
These sections also establish accommo-
dations with respect to the contraceptive
coverage requirement for group health
plans established or maintained by eligible
organizations (and group health insur-
ance coverage provided in connection
with such plans), as well as student health
insurance coverage arranged by eligible
organizations that are institutions of higher
education.
1. Religious Employer Exemption
Under the 2012 final regulations,
HRSA has the authority to issue guide-
lines in a manner that exempts group
health plans established or maintained by
religious employers (and group health in-
surance coverage provided in connection
with such plans) from any requirement
to cover contraceptive services consistent
with the HRSA Guidelines that would oth-
erwise apply. A religious employer was
defined for this purpose as one that: (1)
has the inculcation of religious values as
its purpose; (2) primarily employs persons
who share its religious tenets; (3) primar-
ily serves persons who share its religious
tenets; and (4) is a nonprofit organiza-
tion described in section 6033(a)(1) and
6033(a)(3)(A)(i) or (iii) of the Code. Sec-
tion 6033(a)(3)(A)(i) and (iii) of the Code
refers to churches, their integrated aux-
iliaries, and conventions or associations
of churches, as well as to the exclusively
religious activities of any religious order.
The Departments proposed to simplify
and clarify the definition of religious em-
ployer by eliminating the first three prongs
and clarifying the fourth prong of the defi-
nition. Under this proposal, an employer
that is organized and operates as a non-
profit entity and is referred to in section
6033(a)(3)(A)(i) or (iii) of the Code would
be considered a religious employer for pur-
poses of the religious employer exemp-
tion. These proposed amendments were
intended to eliminate any question as to
whether group health plans of houses of
worship that provide educational, charita-
ble, or social services to their communities
qualify for the exemption. Specifically,
they were intended to ensure that an oth-
erwise exempt plan is not disqualified be-
cause the employer’s purposes extend be-
yond the inculcation of religious values or
because the employer hires or serves peo-
ple of different religious faiths. The De-
partments also proposed to clarify that, for
purposes of the religious employer exemp-
tion, an employer that is organized and
operates as a nonprofit entity is not lim-
ited to any particular form of entity un-
der state law. The Departments reiterate
that, under this standard, it is not neces-
sary to determine the federal tax-exempt
status of the nonprofit entity in determin-
ing whether the religious employer exemp-
tion applies.
26
The Departments received numerous
comments addressing the definition of
religious employer. Some commenters
stated that the proposed definition of reli-
gious employer was too narrow and should
be broadened to include all employers,
both nonprofit and for-profit, that have a
religious objection to providing contracep-
tive coverage in their group health plan.
Some commenters requested that the def-
inition of religious employer be expanded
to exempt not only churches and other
houses of worship, but also religiously
affiliated hospitals and other health care
organizations and other religiously affili-
ated ministries using the concepts of Code
section 414(e). Other commenters rec-
ommended that the requirement to cover
contraceptive servicesbe rescinded alto-
gether.
Some commenters stated that the ex-
emption for religious employers should be
eliminated and that religious employers
should instead be subject to the accom-
modations for eligible organizations so
that their employees may also receive al-
ternative contraceptive coverage without
cost sharing. Other commenters opposed
eliminating the first three prongs of the
definition of religious employer, stating
that only churches and other houses of
worship that meet the criteria of all of the
prongs should be subject to the exemp-
tion. Many commenters agreed with the
Departments that the proposed definition
of religious employer would not mate-
rially expand the universe of religious
employers, but others felt that the pro-
posed definition would unduly broaden it.
Based on their review of these com-
ments, the Departments are finalizing
without change the definition of religious
25
See26 CFR 54.9815–2713T(a)(3) and (4); 29 CFR 2590.715–2713(a)(3) and (4); 45 CFR 147.130(a)(3) and (4). Note, however, if a plan or issuer does not have in its network a provider
who can provide the particular service, then the plan or issuer must cover the item or service when performed by an out-of-network provider and not impose cost sharing with respect to the
item or service.SeeFAQs About Affordable Care Act Implementation (Part XII), Q3 (February 20, 2013), available at:http://www.dol.gov/ebsa/faqs/faq-aca12.html.
26
Similarly, whether a nonprofit entity is a religious employer is determined under this definition without regard to whether the entity files Form 990with the IRS.
2013–31 I.R.B.90July 29, 2013

employer in the proposed regulations. As
indicated in the preamble to the proposed
regulations (78 FR 8461), the simplified
and clarified definition of religious em-
ployer does not expand the universe of
religious employers that qualify for the
exemption beyond that which was in-
tended in the 2012 final regulations, but
only eliminates any perceived potential
disincentive for religious employers to
provide educational,charitable, and so-
cial services to their communities. The
Departments believe that the simplified
and clarified definition of religious em-
ployer continues to respect the religious
interests of houses of worship and their
integrated auxiliaries in a way that does
not undermine the governmental interests
furthered by the contraceptive coverage
requirement. Houses of worship and their
integrated auxiliaries that object to con-
traceptive coverage on religious grounds
are more likely than other employers to
employ people of the same faith who
share the same objection, and who would
therefore be less likely than other people
to use contraceptive services even if such
services were covered under their plan.
Contemporaneous with the issuance
of these final regulations, HRSA is is-
suing amended guidelines implement-
ing the simplified andclarified religious
employer exemption authorized by 45
CFR 147.131(a) of these final regula-
tions (and incorporated by reference in 26
CFR 54.9815–2713(a)(1)(iv) and 29 CFR
2590.715–2713(a)(1)(iv)). The amend-
ments to the guidelines will become effec-
tive beginning August 1, 2013.
2. Accommodations for Health Coverage
Established or Maintained or Arranged
by Eligible Organizations
In addition to simplifying and clarify-
ing the definition of religious employer,
these final regulations establish accommo-
dations with respect to the contraceptive
coverage requirement for health coverage
established or maintained or arranged by
eligible organizations, as defined in these
final regulations. After meeting a self-cer-
tification standard, as described in more
detail in this preamble, nonprofit religious
organizations that qualify for these accom-
modations are not required to contract, ar-
range, pay, or refer for contraceptive cov-
erage; however, plan participants and ben-
eficiaries (or student enrollees and their
covered dependents) will still benefit from
separate payments for contraceptive ser-
vices without cost sharing or other charge
in accordance with section 2713 of the
PHS Act and the companion provisions of
ERISA and the Code. As discussed later
in this setion, the accommodations estab-
lished under these final regulations do not
require the issuance of a separate excepted
benefits individual health insurance pol-
icy covering contraceptive services, as set
forth in the proposed regulations, but in-
stead require a simpler method of provid-
ing direct payments for contraceptive ser-
vices.
a. Definition of Eligible Organization
The final regulations retain the defini-
tion of eligible organization set forth in the
proposed regulations. Accordingly, under
these final regulations, an eligible organi-
zation is an organization that: (1) opposes
providing coverage for some or all of the
contraceptive services required to be cov-
ered under section 2713 of the PHS Act
and the companion provisions of ERISA
and the Code on accountof religious ob-
jections; (2) is organized and operates as a
nonprofit entity; (3) holds itself out as a re-
ligious organization; and (4) self-certifies
that it satisfies the first three criteria (as
discussed in more detail later in this sec-
tion).
Some commenters requested that the
definition of eligible organization be
broadened to include nonprofit secular
employers and for-profit employers with
religious objections tocontraceptive cov-
erage. Other commenters urged that the
definition not be extended to for-profit
employers, arguing that for-profit employ-
ers should not be accommodated because
their purposes are commercial, not reli-
gious. Additionally, several commenters
recommended clarifying how an eligible
organization would show that it holds itself
out as a religious organization. Specif-
ically, commenters suggested clarifying
that only organizations that prominently
and consistently hold themselves out to
the public as religious organizations may
qualify for an accommodation.
The Departments decline to adopt these
suggestions. The definition of eligible or-
ganization in these final regulations is the
same as that in the proposed regulations,
and is intended to allow health coverage
established or maintained or arranged by
various types of nonprofit religious orga-
nizations with religious objections to con-
traceptive coverage to qualify for an ac-
commodation. Consistent with religious
accommodations in related areas of fed-
eral law, such as the exemption for reli-
gious organizations under Title VII of the
Civil Rights Act of 1964, the definition of
eligible organization in these final regula-
tions does not extend to for-profit organi-
zations. The Departments are unaware of
any court granting a religious exemption to
a for-profit organization, and decline to ex-
pand the definition of eligible organization
to include for-profit organizations.
b. Self-Certification
Each organization seeking to be treated
as an eligible organization under the final
regulations, to avoid contracting, arrang-
ing, paying, or referring for contraceptive
coverage, is required to self-certify, prior
to the beginning of the first plan year
to which an accommodation is to apply,
that it meets the definition of an eligi-
ble organization.
27
The self-certification
(as described in these final regulations)
needs to be executed once. A copy of the
self-certification needs to be provided to
a new health insurance issuer or a new
third party administrator if the eligible
organization changes issuers or third party
administrators. Comments addressing
this topic generally approved of the ap-
proach proposed by the Departments, but
some commenters suggested that stronger
protections were needed to promote over-
sight, enforcement, and transparency and
to prevent abuse. For example, some com-
menters recommended requiring eligible
organizations to file their self-certifica-
tions with the Departments and making
such records available to the public. Other
commenters argued that the act of self-cer-
tification would infringe on the First
Amendment right of free speech.
The final regulations do not require the
self-certification to be submitted to any of
the Departments. An eligible organization
27
Although not required to do so by these final regulations, nothing in thesefinal regulations prevents a religious employer from drafting and executing a self-certification regarding its status
as a religious employer and sharing the self-certification with issuers, plan service providers, plan participants or beneficiaries, or others.
July 29, 2013912013–31 I.R.B.

must simply maintain the self-certification
(executed by an authorized representative
of the organization) in its records, in a
manner consistent with the record reten-
tion requirements under section 107 of
ERISA, and make theself-certification
available for examination upon request.
The Departments believe that the re-
quirement to make theself-certification
available for examination upon request ap-
propriately balances regulators’, issuers’,
third party administrators’, and plan par-
ticipants and beneficiaries’ (and student
enrollees and their covered dependents’)
interest in verifying compliance and eli-
gible organizations’ interest in avoiding
undue inquiry into their character, mission,
or practices. Further, the Departments
do not believe that the self-certification
standard infringes on freedom of speech.
The proposed regulations provided that
the self-certification would specify the
contraceptive services for which the or-
ganization will not establish, maintain,
administer, or fund coverage. The final
regulations eliminate this requirement,
pursuant to the standard exclusion policy
discussed later in this section. Further, the
final regulations provide that, if an organ-
ization seeks to be treated as an eligible
organization under the final regulations,
an issuer or third party administrator may
not require any documentation from the
organization beyondits self-certification
as to its status as an eligible organization.
The form to be used for the self-certifica-
tion is being finalized contemporaneous
with the issuance of these final regulations
through the process provided for under the
Paperwork Reduction Act of 1995.
As discussed previously, the self-certi-
fication form is applicable in conjunction
with the accommodations under these final
regulations (that is, for plan years begin-
ning on or after January 1, 2014), after the
expiration of the temporary enforcement
safe harbor. The self-certification standard
referenced in these final regulations (and
theformtobeexecutedbyaneligibleor-
ganization to make such self-certification,
which is being issued contemporaneously
with these final regulations) are different
from the standard (and the form) associ-
ated with the guidance regarding the ex-
tension of the temporary enforcement safe
harbor, which is also being issued contem-
poraneously with these final regulations.
c. Separate Payments for Contraceptive
Services for Participants and Beneficiaries
in Insured Group Health Plans
The proposed regulations provided, in
the case of an insured group health plan
established or maintained by an eligible or-
ganization, that the health insurance issuer
providing group coverage in connection
with the plan be required to assume sole
responsibility, independent of the eligible
organization and its plan, for providing
separate individual health insurance poli-
cies covering contraceptive services for
plan participants and beneficiaries with-
out cost sharing, premium, fee, or other
charge to plan participants or beneficia-
ries or to the eligible organization or its
plan. Under this proposal, an organiza-
tion seeking to be treated as an eligible
organization would need only to meet the
self-certification standard. The issuer,
in turn, would automatically enroll plan
participants and beneficiaries in separate
individual health insurance policies that
cover contraceptiveservices (and notify
them of such enrollment) without the im-
position of any cost-sharing requirement
(such as a copayment, coinsurance, or a
deductible), premium, fee, or other charge
on plan participants or beneficiaries or on
the eligible organization or its plan.
Some commenters stated that the De-
partments should not provide a tailored ac-
commodation for an eligible organization
that objects to only some types of contra-
ceptive services. These commenters said
that customizing individual contraceptive
policies for participants and beneficiaries
(or students enrollees and their covered de-
pendents) in plans of eligible organizations
based on the differing religious objections
to contraceptive coverage of each eligible
organization would create an administra-
tive burden for issuers and confuse plan
participants and beneficiaries (or student
enrollees and their covered dependents).
Some commenters also noted that requir-
ing coordination of benefits might not be
feasible, because manystates prohibit co-
ordination between individual and group
health insurance coverage.
In response to these comments, the final
regulations provide that an issuer provid-
ing payments for contraceptive services
in accordance with these final regulations
may use a standard exclusion from a group
health insurance policy that encompasses
all recommended contraceptive services
and not violate PHS Act section 2713 and
the companion provisions of ERISA and
the Code with respect to the requirement
to cover contraceptive services. While is-
suers may, at their option, choose to offer
customized exclusions from group health
insurance policies based on the differing
religious objectionsto contraceptive cov-
erage of each eligible organization (or
offer several different but standardized
exclusions from group health insurance
policies from which eligible organizations
may choose), they are not required to do
so under these final regulations. Regard-
less of whether an issuer uses a standard
or customized exclusion from a group
health insurance policy, plan participants
and beneficiaries (and student enrollees
and their covered dependents) are assured
that the issuer will make payments for
any recommended contraceptive services
excluded from the group health insurance
policy (or student health insurance cover-
age).
Some commenters noted that the pro-
posed individual health insurance policies
covering contraceptive services might not
be viewed as enforceable contracts under
state contract law because there would
be no premium associated with the cov-
erage and no ability for an individual to
decline coverage. Commenters suggested
that states would need to develop new
regulatory processes for reviewing forms
and rates for such policies, and noted that
the inability to charge a premium for such
policies could raise actuarial soundness
and financial reserve concerns. Com-
menters also noted that state laws would
prevent issuers licensed to issue group
health insurance policies in one state from
issuing individual health insurance poli-
cies to employees of an eligible organiza-
tion residing in other states, and expressed
concern about the cost and administrative
complexity of issuing and administering
individual contraceptive coverage poli-
cies.
These final regulations achieve the
same end by requiring that a health insur-
ance issuer providing group health insur-
ance coverage in connection with a group
health plan established or maintained by an
eligible organization assume sole respon-
sibility for providing separate payments
for contraceptive services directly for plan
participants and beneficiaries, without
2013–31 I.R.B.92July 29, 2013

cost sharing, premium, fee, or other charge
to plan participants or beneficiaries or to
the eligible organization or its plan. The
requirement that, for plan participants and
beneficiaries, issuers provide payments
for contraceptive services, in lieu of indi-
vidual health insurance policies that cover
contraceptive services, represents a sim-
pler approach and responds to concerns
raised by commenters, while still ensuring
that eligible organizations and their plans
do not contract, arrange, pay, or refer
for such coverage, and that contraceptive
coverage is expressly excluded from the
group health insurance coverage.
Under these final regulations, as under
the proposed regulations, the eligible or-
ganization need only meet the self-certifi-
cation standard and provide to the issuer
a copy of its self-certification. The issuer
that receives the copy of the self-certifi-
cation from the eligible organization must
expressly exclude contraceptive coverage-
either all contraceptive coverage or cov-
erage of specific contraceptive services if
the issuer chooses to customize the exclu-
sion-from the group health insurance cov-
erage of the eligible organization. The is-
suer must also notify plan participants and
beneficiaries, contemporaneous with (to
the extent possible)but separate from any
application materialsdistributedincon-
nection with enrollment (or re-enrollment)
in group health coverage that is effective
beginning on the first day of each appli-
cable plan year, that the issuer provides
payments for contraceptive services at no
cost separate from the group health plan
for so long as the participant or benefi-
ciary remains enrolled in the plan, as dis-
cussed later in this section. Unlike un-
der the proposed regulations, the issuer is
notrequiredtoissuetoplanparticipants
and beneficiaries individual health insur-
ance policies covering contraceptive ser-
vices, and, thus, there is no need to con-
sider such coverage excepted benefits, as
proposed. Instead, under these final reg-
ulations, the issuermust, as a federal reg-
ulatory requirement, provide payments for
contraceptive services for plan participants
and beneficiaries, separate from the group
health plan, without the imposition of cost
sharing, premium, fee, or other charge on
plan participants or beneficiaries or on the
eligible organization or its plan. Under this
simplified approach, issuers will not in-
cur the associated administrative costs of
issuing individual contraceptive coverage
policies.
This simpler approach to the accom-
modation for insured coverage does not
trigger certain aspects of state insurance
law. As the payments at issue derive solely
from a federal regulatory requirement,
not a health insurance policy, they do not
implicate issues such as issuer licensing
and product approval requirements under
state law, and they minimize cost and ad-
ministrative complexity for issuers. At the
same time, because the payments for con-
traceptive services are not a group health
plan benefit under this approach, this pol-
icy ensures that eligible organizations and
their plans do not contract, arrange, pay,
or refer for contraceptive coverage, and
that such coverage is expressly excluded
from their group health insurance policies.
This approach also minimizes barriers in
access to care because plan participants
and beneficiaries (and their health care
providers) do not have to have two sep-
arate health insurance policies (that is,
the group health insurance policy and the
individual contraceptive coverage pol-
icy). Furthermore, Small Business Health
Insurance Options Programs (SHOPs)
(the small group market Exchanges) do
not need to make operational changes as
a result of the accommodation. Small
employers that are eligible organizations
purchasing coverage through a SHOP can
simply provide a copy of their self-certi-
fication to the issuer (rather than provide
it to the SHOP) to ensure that their small
group market policy is provided in a man-
ner consistent with these final regulations.
Although these payments for contra-
ceptive services are not benefits under a
health insurance policy, to fulfill an is-
suer’s responsibilities under section 2713
of the PHS Act and the companion pro-
visions of ERISA and the Code and con-
sistent with the proposed regulations, an
issuer must make them available in a way
that meets minimum standards for con-
sumer protection, which would ordinarily
accompany coverage of recommended
preventive health services without cost
sharing under section 2713 of the PHS Act
and the companion provisions of ERISA
and the Code. Thus, issuers, in order to
satisfy their regulatory obligations under
these final regulations, must make these
payments for contraceptive services in a
manner consistent with the requirements
under the following provisions of the
PHS Act and the companion provisions
of ERISA and the Code (and their imple-
menting regulations): PHS Act sections
2706 (non-discrimination in health care),
2709 (coverage for individuals participat-
ing in approved clinical trials), 2711 (no
lifetime or annual limits), 2713 (cover-
age of preventive health services), 2719
(appeals process), and 2719A (patient
protections), as incorporated by reference
into ERISA section 715 and Code section
9815.
28
Consistent with these standards
and as described in the 2010 interim final
regulations, an issuer may apply reason-
able medical management techniques and
may require that contraceptive services
be obtained in-network (if an issuer has
a network of providers) in order for plan
participants and beneficiaries to obtain
such services without cost sharing.
29
Issuers are prohibited from charging
any premium, fee, or other charge to el-
igible organizations or their plans, or to
plan participants or beneficiaries, for mak-
ing payments for contraceptive services,
and must segregate the premium revenue
collected from eligible organizations from
the monies they use to make such pay-
ments. In making such payments, the
issuer must ensure that it does not use any
premiums collected from eligible organi-
zations. Issuers have flexibility in how
to structure these payments, provided that
the payments in no way involve the eligi-
ble organization, and provided that issuers
are able to account for this segregation of
funds in accordance with applicable, gen-
erally accepted accounting and auditing
standards.
The Departments stated in the pream-
ble of the proposed regulations that issuers
would find that providing contraceptive
28
With respect to the accommodation for self-insured coverage of eligible organizations under these final regulations, a comparable requirement to provide separate payments for contraceptive
services consistent with these consumer protections is not explicitly placed on the third party administrator. This is because, as the plan administrator for contraceptive coverage, the third
party administrator is already required to comply with these consumer protections, as well as all other provisions of ERISA that are applicable to group health plans, including ERISA sections
104 and 503, and the requirements of Part 7 of ERISA.
29
See26 CFR 54.9815–2713T(a)(3) and (4); 29 CFR 2590.715–2713(a)(3) and (4); 45 CFR 147.130(a)(3) and (4).
July 29, 2013932013–31 I.R.B.

coverage is at least cost neutral because
they would be insuring the same set of
individuals under both the group health
insurance policies and the separate in-
dividual contraceptive coverage policies
and, as a result, would experience lower
costs from improvements in women’s
health, healthier timing and spacing of
pregnancies, and fewer unplanned preg-
nancies. The Departments continue to
believe, and have evidence to support, that,
with respect to the accommodation for
insured coverage established under these
final regulations, providing payments for
contraceptive services is cost neutral for
issuers. Several studies have estimated
that the costs of providing contraceptive
coverage are balanced by cost savings
from lower pregnancy-related costs and
from improvements in women’s health.
30
,
31
The Departments are unaware of any
studies to the contrary.
32
Some commenters raised specific pre-
mium rating and accounting issues related
to the proposed regulations’ approach to
the cost neutrality of issuers providing
contraceptive coverage. These com-
menters generally asserted that the cost
savings due to lower pregnancy-related
costs and improvements in women’s health
would flow to employers through reduced
premiums, thereby leaving issuers uncom-
pensated for the cost of providing contra-
ceptive coverage. Further, commenters
stated that, in the case of a group health
insurance policy in the small group mar-
ket, the small employer’s reduced claims
experience attributable to contraceptive
coverage (not including the issuer’s direct
costs of contraceptive coverage) would
be spread across the issuer’s single risk
pool for the entire small group market in
a state and result in a lower index rate
for pricing all of the issuer’s small group
market products. Thus, according to these
commenters, in both the large and small
group markets, issuers would not reap the
cost savings attributable to contraceptive
coverage, and would need to fund the costs
of a free-standing contraceptive coverage
policy from some other source.
One commenter suggested that it would
be possible to view the provision of contra-
ceptive coverage as cost neutral if an issuer
were to set the premium otherwise charged
to an eligible organization as though plan
participants and beneficiaries did not have
separate contraceptive coverage. Other
commenters argued that the rationale for
providing Federally-facilitated Exchange
(FFE) user fee adjustments in connection
with the accommodation for self-insured
group health plans of eligible organiza-
tions was equally applicable in the context
of insured group health plans of eligible or-
ganizations and recommended that issuers
be permitted to charge a premium or oth-
erwise be compensated for providing con-
traceptive coverage.
In response to these comments, the De-
partments continue to believe that issuers
have various options for achieving cost
neutrality, notwithstanding that they must
make payments for contraceptive services
without cost sharing, premium, fee, or
other charge to the eligible organization,
the group health plan, or plan participants
or beneficiaries.
Issuers of large group insured products
have an option by which they can ensure
that they accrue the cost savings from
reduced pregnancy-related expenses and
other health care costs. For large group
market products, issuers base premiums on
an employer’s prior year claims cost (that
is, experience rating) and other factors.
33
Some commenters asserted that this rating
practice means that any cost savings from
fewer pregnancies and childbirths and
improvements in women’s health will be
passed to the employer in the large group
insured market. Given that there appears
to be no legal requirement that issuers
use this particular rating practice, and that
this practice often entails adding costs to
premiums that are not based solely on
the experience of the employer’s group,
34
issuers reasonably could set the premium
for an eligible organization’s large group
policy as if no payments for contraceptive
services had been provided to plan partic-
ipants and beneficiaries — reflecting the
actual terms of the group policy, which ex-
pressly excludes contraceptive coverage.
This approach would be consistent with
pricing methodologies currently used in
the health insurance industry.
Another option is to treat the cost of
payments for contraceptive services for
women enrolled in insured group health
plans established or maintained by eligible
organizations as an administrative cost
that is spread across the issuer’s entire
risk pool, excluding plans established or
maintained by eligible organizations given
that issuers are prohibited from charg-
ing any premium, fee, or other charge
to eligible organizations or their plans
for providing payments for contraceptive
services. In the small group market, is-
suers are required beginning in 2014 to
treat all of their non-grandfathered busi-
ness within a state as a single risk pool,
and administrative costs may be spread
evenly across all plans in the single risk
pool (although issuers are permitted to
apply them on a plan basis). In the large
group market, while there is no single risk
pool requirement, issuers generally spread
administrative costs across their entire
book of business.
35
In 2011, health insur-
ance issuers earned approximately $290
billion in premiums in the insured small
30
Bertko, J., Glied, S., et al. The Cost of Covering Contraceptives Through Health Insurance (February 9, 2012),http://aspe.hhs.gov/health/reports/2012/contraceptives/ib.shtml;Washing-
ton Business Group on Health, Promoting Healthy Pregnancies: Counseling and Contraception as the First Step, Report of a Consultation with Businessand Health Leader (September 20,
2000),http://www.businessgrouphealth.org/pdfs/healthypregnancy.pdf; Campbell, K.P., Investing in Maternal and Child Health: An Employer’s Toolkit, National Business Group on Health
http://www.businessgrouphealth.org/healthtopics/maternalchild/investing/docs/mch_toolkit.pdf; Trussell, J., et al. The Economic Value of Contraception: A Comparison of 15 Methods, Amer-
ican Journal Public Health, 1995; 85(4):494–503, Revenues of H.R. 3162, the Children’s Health and Medicare Protection Act, for the Rules Committee (August 1, 2007)http://www.cbo.gov/ft-
pdocs/85xx/doc8519/HR3162.pdf.
31
The Departments believe that these same cost savings found by issuers of group health insurance would also be found by issuers of student health insurance coverage.
32
One commenter cited two studies disputing the cost effectiveness of preventive health services, but these studies are not specific to contraceptiveservices. Further, these studies find that
preventive care is not cost effective when a large population receives the preventive service but only a small fraction of that population would have developed the condition being prevented,
a circumstance not presented here. See Cohen, J., et al., New England Journal of Medicine. 2008, 358:661–663 (February 14, 2008)http://www.nejm.org/toc/nejm/358/7; CBO Letter to
Congressman Nathan Deal, (August 7, 2009).http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/104xx/doc10492/08–07-prevention.pdf.
33
http://www.nahu.org/consumer/GroupInsurance.cfm.
34
http://www.actuary.org/files/Draft_Large_Group_Medical_Business_Practice_Note_Jan_2013.pdf.
35
Bluhm, W., ed., Group Insurance, 5th Ed. 2007), 459–460.
2013–31 I.R.B.94July 29, 2013

and large group markets.
36
If the cost of
providing payments for contraceptive ser-
vices for participants and beneficiaries in
insured group health plans established or
maintained by eligible organizations were
treated as an administrative cost spread
across an issuer’s entire book of business
(excluding plans established or maintained
by eligible organizations), the cost of pro-
viding such payments would result in an
imperceptible increasein administrative
load.
37
These changes in premiums would
be negligible and effectively cost neutral
to issuers, even before considering any
reductions in claims costs that accrue to
the issuer.
Under either option, after meeting the
self-certification standard, the eligible or-
ganization would not contract, arrange,
pay, or refer for contraceptive coverage.
HHS intends to clarify in guidance that
an issuer of group health insurance cov-
erage that makes payments for contracep-
tive services under these final regulations
may treat those payments as an adjustment
to claims costs for purposes of medical
loss ratio and risk corridor program cal-
culations.
38
This adjustment compensates
for any increase in incurred claims associ-
ated with making payments for contracep-
tive services.
Several commenters expressed con-
cern that participants and beneficiaries
in plans of eligible organizations would
be automatically enrolled in individual
contraceptive coverage policies and rec-
ommended providing an opt-out for plan
participants and beneficiaries who object
to contraceptive coverage on religious
grounds. Other commenters stated that
allowing participants and beneficiaries to
opt out of such contraceptive coverage
would create an administrative burden
on issuers and privacy concerns for indi-
viduals because the issuers would know
which individuals opted in or opted out
of such coverage. The simplified ap-
proach described in these final regulations
eliminates this issue altogether, because
issuers are not required to issue individual
contraceptive coverage policies at all.
39
Rather, they are required only to provide
payments for contraceptive services for
those plan participants and beneficiaries
who opt to use such services. Nothing in
these final regulations compels any plan
participant or beneficiary to use such ser-
vices, and nothing causes participants or
beneficiaries to be automatically enrolled
in contraceptive coverage; therefore, these
concerns are addressed without the need
for an opt-out mechanism. Moreover,
nothing in these final regulations precludes
employers or others from expressing any
opposition to the use of contraceptives or
requires health care providers to prescribe
or provide contraceptives, if doing so is
against their religious beliefs.
The Departments explained in the pre-
amble of the proposed regulations that a
health insurance issuer providing group
health insurance coverage in connection
with a group health plan established or
maintained by an eligible organization
would be held harmless if the issuer relied
in good faith on a representation by the
organization as to its eligibility for the
accommodation and such representation
was later determined to be incorrect. The
Departments also explained that an eli-
gible organization and its plan would be
held harmless if the issuer were to fail
to comply with the requirement to pro-
vide separate payments for contraceptive
services for plan participants and bene-
ficiaries at no cost. Some commenters
requested that the Departments codify this
policy in regulation text. Accordingly,
this policy is now codified in paragraph
(e) of 26 CFR 54.9815–2713A, 29 CFR
2590.715–2713A, and 45 CFR 147.131 of
these final regulations.
To summarize, the following are the
key elements of the accommodation that is
being made for eligible organizations with
insured group health plans:
•An organization seeking to be treated
as an eligible organization needs only
to self-certify that it is an eligible or-
ganization, provide the issuer with a
copy of the self-certification, and sat-
isfy the recordkeeping and inspection
requirements of the self-certification
standard.
•The issuer that receives a self-certifica-
tion must then expressly exclude con-
traceptive coverage from the eligible
organization’s group health insurance
coverage.
•The issuer must, contemporaneous
with (to the extent possible), but sep-
arate from, any application materials
distributed in connection with en-
rollment (or re-enrollment) in group
health coverage that is effective begin-
ning on the first day of each applicable
plan year, notify plan participants and
beneficiaries that the issuer provides
separate payments for contraceptive
services at no cost for so long as the
participant or beneficiary remains en-
rolled in the plan.
•The issuer must segregate premium
revenue collected from the eligible
organization from the monies used to
make payments for contraceptive ser-
vices. When it makes payments for
contraceptive services used by plan
participants and beneficiaries, the is-
suer must do so without imposing any
premium, fee, or other charge, or any
portion thereof, directly or indirectly,
on the eligible organization, its group
health plan, or its plan participants or
beneficiaries. In making such pay-
ments, the issuer must ensure that it
does not use any premiums collected
from eligible organizations. Issuers
have flexibility in how to structure
these payments, but must be able to
account for this segregation of funds,
subject to applicable, generally ac-
cepted accounting and auditing stan-
dards. Thus, an eligible organization
need not contract, arrange, pay or refer
for contraceptive coverage.
•Plan participants and beneficiaries
may refuse to use contraceptive ser-
vices.
•An eligible organization and its group
health plan are considered to com-
ply with the contraceptive coverage
requirement even if the issuer fails
to comply with the requirement to
provide separate payments for contra-
36
2011 MLR-A data, submitted to CMS in July 2012.
37
Office of Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, “Cost-Neutrality of Contraceptive Coverage.”
38
See 45 CFR Part 158 for standards related to the medical loss ratio and 45 CFR Part 153 Subpart F for standards related to the risk corridor program.
39
The same is true with respect to the accommodation for self-insured coverageof eligible organizations under these final regulations, given that third party administrators similarly are not
required to arrange for individual contraceptive coverage policies at all.
July 29, 2013952013–31 I.R.B.

ceptive services for plan participants
and beneficiaries at no cost.
d. Separate Payments for Contraceptive
Services for Participants and Beneficiaries
in Self-Insured Group Health Plans
Comments varied as to which of the
three proposed approaches to providing
separate contraceptive coverage without
cost sharing for participants and bene-
ficiaries in self-insured plans of eligible
organizations should be finalized. Some
commenters suggested that none of the
proposed approaches would enable ob-
jecting employers to separate themselves
completely from the administration of con-
traceptive coverage. These commenters
requested an unqualified exemption from
the contraceptive coverage requirement
for such employers. Other commenters
stated that none ofthe proposed ap-
proaches would sufficiently ensure that
participants and beneficiaries in self-in-
sured plans of eligible organizations would
receive separate contraceptive coverage
without cost sharing. These commenters
requested that the final regulations require
that objecting employers retain legal re-
sponsibility for any failure on the part
of issuers or third party administrators to
provide such coverage.
A number of commenters expressed
concern about the responsibilities that
one or more of the proposed approaches
would impose on third party administra-
tors. Some of these commenters suggested
that the proposed requirement that third
party administrators arrange for separate
contraceptive-only coverage through an
issuer would convert third party admin-
istrators into health insurance brokers.
Others suggested that third party admin-
istrators would not be willing to assume
the responsibility of arranging for separate
contraceptive-only coverage. These com-
menters also suggested that, even if a third
party administrator were willing to assume
such responsibility, it would pass along
the resultant increase in its administrative
costs to the employer.
Other commenters expressed concern
about an approach that would require third
party administrators to become plan ad-
ministrators and fiduciaries under section
3(16) of ERISA for the sole purpose of
arranging contraceptive coverage. These
commenters suggested that requiring third
party administrators to serve as fiduciaries
would increase their exposure to legal li-
ability and also create conflicts of inter-
est with their plan sponsor clients given
that many agreements between third party
administrators and plan sponsors prohibit
third party administrators from serving as
fiduciaries.
A number of commenters questioned
the Department of Labor’s legal author-
ity to designate a third party administra-
tor as the plan administrator for contra-
ceptive coverage by virtue of the eligible
organization providing a copy of its self-
certification to the third party administra-
tor. These commenters suggested that the
self-certification of the eligibility of the or-
ganization for the accommodation would
be insufficient to act as a designation un-
der ERISA section 3(16)(A)(i), and ques-
tioned whether the self-certification could
be defined as an instrument under which
the plan is operated.
After reviewing the comments on the
three proposed approaches, the Depart-
ments are finalizingthe third approach
under which the third party administrator
becomes an ERISA section 3(16) plan ad-
ministrator and claims administrator solely
for the purpose of providing payments
for contraceptive services for participants
and beneficiaries in a self-insured plan
of an eligible organization at no cost to
plan participants or beneficiaries or to the
eligible organization. The Departments
have determined that the ERISA section
3(16) approach most effectively enables
eligible organizations to avoid contract-
ing, arranging, paying, or referring for
contraceptive coverage after meeting the
self-certification standard, while also cre-
ating the fewest barriers to or delays in
plan participants and beneficiaries obtain-
ing contraceptive services without cost
sharing.
Under this approach, as set forth in
these final regulations, with respect to
the contraceptive coverage requirement,
an eligible organization is considered to
comply with section 2713 of the PHS Act
and the companion provisions in ERISA
and the Code if it provides to all third
party administrators with which it or its
plan has contracted a copy of its self-certi-
fication, consistent with the requirements
of these final regulations.
40
The self-cer-
tification must: (1) state that the eligible
organization will not act as the plan ad-
ministrator or claims administrator with
respect to contraceptive services or con-
tribute to the funding of contraceptive
services; and (2) cite 29 CFR 2510.3–16
and 26 CFR 54.9815–2713A and 29 CFR
2590.715–2713A, which explain the obli-
gations of the third party administrator.
Upon receipt of the copy of the self-certi-
fication, the third party administrator may
decide not to enter into, or remain in, a
contractual relationship with the eligible
organization to provide administrative ser-
vices for the plan.
As relevant here, a plan administrator
isdefinedinERISAsection3(16)(A)(i)as
“the person specifically so designated by
the terms of the instrument under which
the plan is operated.” As a document no-
tifying the third party administrator(s) that
the eligible organization will not provide,
fund, or administer payments for contra-
ceptive services, the self-certification is
one of the instruments under which the em-
ployer’s plan is operated under ERISA sec-
tion 3(16)(A)(i). Theself-certification will
afford the third party administrator notice
of obligations set forth in these final reg-
ulations, and will be treated as a designa-
tion of the third party administrator(s) as
plan administrator and claims administra-
tor for contraceptive benefits pursuant to
section 3(16) of ERISA. Additional condi-
tions the eligible organization must meet in
order to be considered to comply with PHS
Act section 2713 and the companion provi-
sions in ERISA and the Code include pro-
hibitions on: (1) directly or indirectly in-
terfering with a third party administrator’s
efforts to provide or arrange separate pay-
40
Third party administrators are hired by plan sponsors to process claims andadminister other administrative aspects of employee benefit plans. In some cases, a plan hires different third
party administrator to administer claims for different classifications of benefits. (For example, one plan may contract with a pharmacy benefit manager (PBM) to handle claims administration
for prescription drugs and another third party administrator to handle claims for inpatient and outpatient medical/surgical benefits.) To the extent the plan hires more than one third party
administrator, each third party administrator would become the section 3(16) plan administrator with respect to the types of claims it normally processes (that is, the PBM would continue
to handle claims for prescription drugs and the other third party administrator would continue to handle claims for inpatient and outpatient medical/surgical benefits); each would do so in
accordance with section 2713 of the PHS Act and the companion provisions of ERISA and the Code (even if plan terms might otherwise provide differently)as plan administration that may
be funded in accordance with 45 CFR 156.50(d).
2013–31 I.R.B.96July 29, 2013

ments for contraceptive services for partic-
ipants or beneficiaries in the plan and (2)
directly or indirectly seeking to influence a
third party administrator’s decision to pro-
vide or arrange such payments.
41
A third party administrator that receives
a copy of the self-certification and that
agrees to enter into or remain in a con-
tractual relationship with the eligible or-
ganization to provide administrative ser-
vices for the plan must provide or arrange
separate payments for contraceptive ser-
vices for participants and beneficiaries in
the plan without cost sharing, premium,
fee, or other charge to plan participants or
beneficiaries, or to the eligible organiza-
tion or its plan. The third party administra-
tor can provide such payments on its own,
or it can arrange for an issuer or other en-
tity to provide such payments. In either
case, like the payments for contraceptive
services under the accommodation for in-
sured plans of eligible organizations dis-
cussed previously, the payments are not
health insurance policies. Moreover, in ei-
ther case, the third party administrator can
make arrangements with an issuer offering
coverage through an FFE to obtain reim-
bursement for its costs (including an al-
lowance for administrative costs and mar-
gin). As discussed later in this section, the
issuer offering coverage through the FFE
can receive an adjustment to the FFE user
fee, and the issuer is required to pass on a
portion of that adjustment to the third party
administrator to account for the costs of
providing or arranging payments for con-
traceptive services. A third party admin-
istrator that provides or arranges the pay-
ments is entitled to retain reimbursement
for its costs for the period during which
it reasonably and in good faith relied on a
representation by the eligible organization
that it was eligible for the accommodation.
This is so even if the organization’s repre-
sentation was later determined to be incor-
rect.
The third party administrator must pro-
vide plan participants and beneficiaries
with notice of the availability of the sep-
arate payments for contraceptive services
contemporaneous with (to the extent pos-
sible), but separate from, any application
materials distributed in connection with
enrollment (or re-enrollment) in coverage
that is effective beginning on the first day
of each applicable plan year (as discussed
in more detail later in this section). Third
party administrators must also take on the
statutory responsibilities of a plan admin-
istrator under ERISA, including setting up
and operating a claims procedure under
ERISA section 503, providing plan partic-
ipants and beneficiaries with disclosures
required under ERISA section 104, and
complying with the requirements of Part
7 of ERISA. The Departments note that
there is no obligation for a third party
administrator to enter into or remain in a
contract with the eligible organization if it
objects to any of these responsibilities.
The Departments believe that this ap-
proach most successfully addresses both
the desire of some commenters for plan
participants and beneficiaries to receive
contraceptive coverage without cost shar-
ing, without delays or other barriers, and
the desire of other commenters for object-
ing employers to be separated from con-
tracting, arranging, paying, or referring for
contraceptive coverage. The third party
administrator serving as the plan admin-
istrator for contraceptive benefits ensures
that there is a party with legal authority
to arrange for payments for contraceptive
services and administer claims in accor-
dance with ERISA’s protections for plan
participants and beneficiaries. At the same
time, the approach enables objecting em-
ployers, after providing third party admin-
istrators with a copy of the self-certifi-
cation (as described previously), to sepa-
rate themselves from contracting, arrang-
ing, paying, or referring for contracep-
tive coverage. Additionally, by substi-
tuting payments for contraceptive services
for health insurance policies, this approach
avoids the complications that would be
presented by requiring the creation of a
contraceptive-only health insurance prod-
uct, and allows third party administrators
to avoid potentially becoming health in-
surance brokers. Accordingly, while the
Departments appreciate commenters’ con-
cerns about the responsibilities that third
party administrators must assume under
this accommodation, they believe that this
approach best ensures that plan partici-
pants and beneficiaries receive contracep-
tive coverage without cost sharing, and
without the objecting employers paying
for or administering such coverage.
Moreover, none of the comments
changed the Department of Labor’s view
that it has legal authority to require the
third party administrator to become the
plan administrator under ERISA section
3(16) for the sole purpose of providing
payments for contraceptive services if
the third party administrator agrees to
enter into or remain in a contractual re-
lationship with the eligible organization
to provide administrative services for
the plan. The Department of Labor has
broad rulemaking authority under Title I
of ERISA, which includes the ability to
interpret the definition of plan adminis-
trator under ERISA section 3(16)(A)(i).
The Department of Labor’s interpretation
of the self-certification described herein
as one of the “instruments under which
the plan is operated” is consistent with
the plain meaning of the term because it
identifies the limited set of plan benefits
(that is, contraceptive coverage) that the
employer refuses to provide and that the
third party administrator must therefore
provide or arrange for an issuer or another
entity to provide.
e. Self-Insured Group Health Plans
Without Third Party Administrators
Although some commenters addressed
the solicitation for comments on whether
and how to provide an accommodation
for self-insured group health plans estab-
lished or maintained by eligible organi-
zations that do not use the services of a
third party administrator, no comments in-
dicated that such plans actually exist. Ac-
cordingly, the Departments continue to be-
lieve that there are no self-insured group
health plans in this circumstance. How-
ever, to allow for the possibility that such
a self-insured group health plan does ex-
ist, the Departments will provide any such
plan with a safe harbor from enforcement
of the contraceptive coverage requirement,
contingent on: (1) the plan submitting to
HHS information (as described later in this
section) showing that it does not use the
services of a third party administrator; and
(2) if HHS agrees that the plan does not
use the services of a third party admin-
istrator, the plan providing notice to plan
participants and beneficiaries in any ap-
plication materials distributed in connec-
41
Nothing in these final regulations prohibits an eligible organization from expressing its opposition to the use of contraceptives.
July 29, 2013972013–31 I.R.B.

tion with enrollment (or re-enrollment) in
coverage that is effective beginning on the
first day of each applicable plan year, indi-
cating that it does not provide benefits for
contraceptive services.
Such plans must submit to HHS at least
60 days prior to the first day of the first
applicable plan year all of the following
information:
•Identifying information for the plan,
the eligible organization that acts as the
plan sponsor, and an authorized rep-
resentative of the organization, along
with the authorized representative’s
telephone number and e-mail address.
•A listing of the five most highly com-
pensated non-clinical plan service
providers (other than employees of the
plan or plan sponsor), including con-
tact information for each plan service
provider, a concise description of the
nature of the services provided by each
service provider to the plan, and the
annual amount of compensation paid
to each plan service provider (exam-
ples of plan services include claims
processing and adjudication, appeals
management, provider network devel-
opment, and pharmacy benefit man-
agement).
•An attestation (executed by an autho-
rized representative of the organiza-
tion) that the plan is established or
maintained by an eligible organization,
and is operated in compliance with all
applicable requirements of part A of
title XXVII of the PHS Act, as incor-
porated into ERISA and the Code.
Suchinformationmustbe
submittedelectronicallyto
marketreform@cms.hhs.gov.
If any such submission demonstrates
that a self-insured group health plan estab-
lished or maintained by an eligible organ-
ization does not use the services of a third
party administrator, the Departments will
provide a safe harbor from enforcement
of the contraceptive coverage require-
ment while an additional accommodation
is considered. If the Departments dis-
cover through any such submission that a
self-insured group health plan established
or maintained by an eligible organization
does in fact use the services of a third
party administrator, the eligible organi-
zation must either follow the procedures
described in these final regulations to
obtain an accommodation or otherwise
comply with the contraceptive coverage
requirement.
f. Notice of Availability of Separate
Payments for Contraceptive Services
Consistent with the proposed regula-
tions, the final regulations direct that, for
any plan year to which an accommoda-
tion is to apply, a health insurance issuer
providing separate payments for contra-
ceptive services pursuant to the accom-
modation, or a third party administrator
arranging or providing such payments (or
its agent), must provide timely written
notice about this fact to plan participants
and beneficiaries in insured or self-insured
group health plans (or student enrollees
and their covered dependents in student
health insurance coverage) of eligible or-
ganizations.
Under the proposed regulations, this
notice would be provided by the issuer
contemporaneous with (to the extent pos-
sible) but separate from any application
materials distributed in connection with
enrollment (or re-enrollment) in health
coverage established or maintained or
arranged by the eligible organization.
Commenters noted that employers, not is-
suers, typically distribute plan enrollment
(or re-enrollment) materials to employees
and that providing this notice contempo-
raneous with plan enrollment (or re-en-
rollment) materials would not be possible
because issuers typically do not receive
enrollee information prior to enrollment.
Consistent with the simplified approach
described previously, these final regula-
tions provide that this notice must be pro-
vided by either the issuer providing sep-
arate payments for contraceptive services
under the accommodation, or a third party
administrator arranging or providing such
payments (or its agent). The notice must
be provided contemporaneous with (to the
extent possible), but separate from, any ap-
plication materialsdistributed in connec-
tion with enrollment (or re-enrollment) in
coverage that is effective beginning on the
first day of each plan year to which the
accommodation applies, and it must indi-
cate that the eligible organization does not
fund or administer contraceptive benefits,
but that the issuer or third party adminis-
trator will provideseparate payments for
contraceptive services at no cost. The De-
partments believe that the direction that the
notice be provided contemporaneous with
application materials “to the extent possi-
ble” provides sufficient flexibility to ad-
dress the concerns raised by commenters
about the timing of the notice.
The final regulations continue to pro-
vide model language that may be used to
satisfy this notice requirement. Substan-
tially similar language may also be used to
satisfy the notice requirement. Some com-
menters suggested additions or modifica-
tions to the model language. Other com-
menters stated that the Departments should
not allow the use of substantially similar
language. Additionally, some commenters
recommended the Departments set stan-
dards to ensure that the notice is accessi-
ble to persons with limited English profi-
ciency and persons with disabilities. The
Departments believe that the model lan-
guage in the final regulations, along with
existing guidance concerning civil rights
obligations, provide sufficient notice. The
Departments also believe that the flexi-
bility afforded by the final regulations to
use substantially similar language is gen-
erally consistent with other federal notice
requirements.
The notice must include contact in-
formation for the issuer or third party
administrator in the event plan participants
and beneficiaries (or student enrollees and
their covered dependents) have questions
or complaints. The Departments note
that issuers and third party administrators
may find it useful to provide additional
written information concerning how to
obtain reimbursement for contraceptive
services, appeals procedures, provider
and pharmacy networks, prescription drug
formularies, medical management proce-
dures, and similar issues.
42
g. Student Health Insurance Coverage
Consistent with the HHS proposed reg-
ulation, paragraph (f) of the HHS final reg-
ulation provides that an accommodation
applies to student health insurance cover-
age arranged by an eligible organization
42
Furthermore, as discussed previously, with respect to self-insured coverage, third party administrators that are plan administrators must operate in accordance with Part 1 of ERISA, including
ERISA section 104, which generally requires certain disclosures regarding plan benefits and limitations.
2013–31 I.R.B.98July 29, 2013

that is an institution of higher education in
a manner comparable to that in which it
applies to group health insurance coverage
provided in connection with a group health
plan established or maintained by an eligi-
ble organization that is an employer. For
this purpose, any reference to plan partic-
ipants and beneficiaries is a reference to
student enrollees and their covered depen-
dents.
Several commenters supported treat-
ing student health insurance like em-
ployer-sponsored group health insurance
for purposes of these final regulations.
Other commenters suggested that an ac-
commodation should not extend to insti-
tutions of higher education that arrange
student health insurance coverage, be-
cause student health insurance coverage
is considered a type of individual rather
than group health insurance coverage
under federal law.
43
One commenter rec-
ommended that issuers offering coverage
through the Exchanges be required to pro-
vide separate contraceptive coverage at
no cost to students enrolled in nonprofit
religious institutions of higher education
with religious objections to contraceptive
coverage (and their dependents).
Student health insurance coverage
is administered differently than other
individual health insurance coverage.
Whereas most individual health insur-
ance coverage is issued under a contract
between an individual policyholder and
a health insurance issuer, student health
insurance coverage is available to student
enrollees and their covered dependents
pursuant to a written agreement between
an institution of higher education and a
health insurance issuer. Some religiously
affiliated colleges and universities object
to signing a written agreement or provid-
ing financial assistance for student health
insurance coverage that provides benefits
for contraceptive services. For these rea-
sons, HHS believes that it is appropriate
to take into account religious objections
to contraceptive coverage of eligible or-
ganizations that are institutions of higher
education and is finalizing the provision
applicable to student health insurance cov-
erage as proposed. HHS notes that it does
not have the authority to require issuers of-
fering coverage through the Exchanges to
provide separate contraceptive coverage at
no cost to students (and their dependents).
The Departments note that any accom-
modation specific to a nonprofit religious
institution of higher education is intended
to accommodate the nonprofit religious
institution of higher education only with
respect to its arrangement of student health
insurance coverage for its students and
their covered dependents. With respect
to the establishment or maintenance of
a group health plan by a nonprofit reli-
gious institution of higher education for
its employees and their dependents, the
nonprofit religious institution of higher
education is intended to be accommodated
in the same manner as that in which any
other eligible organization that has estab-
lished or maintained a group health plan
for its employees and their dependents is
to be accommodated.
C. Adjustments of Federally-Facilitated
Exchange User Fees–45 CFR 156.50(d)
and 156.80(d)
These sections of the final HHS reg-
ulation set forth processes and standards
to fund the payments for the contraceptive
services that are provided for participants
and beneficiaries in self-insured plans of
eligible organizations under the accommo-
dation described previously, at no cost to
plan participants or beneficiaries, eligible
organizations, third party administrators,
or issuers, through an adjustment in the
FFE user fee payable by an issuer partic-
ipating in an FFE.
44
In response to the proposed regulations,
some commenters questioned HHS’s au-
thority to establish the FFE user fee ad-
justment. Commenters also recommended
that HHS ensure that the adjustments to
user fee collections not undermine FFE op-
erations. Commenters stated that the FFE
user fee should not be increased to off-
set the user fee adjustment. Commenters
further stated that the FFE user fee ad-
justment must be adequate to provide fi-
nancial incentives to ensure that women
in self-insured plans of eligible organiza-
tions receive contraceptive coverage at no
cost. Commenters suggested that the FFE
user fee adjustment may not be an ade-
quate long-term funding source as more
states establish Exchanges over time, re-
ducing the number of FFEs and therefore
available FFE user fee revenue.
Office of Management and Budget
(OMB) Circular No. A–25R establishes
federal policy regarding these types of user
fees. Consistent with that Circular, the
revised FFE user fee calculation (which
will result in an adjustment of the FFE
user fee) will facilitate the accommodation
of self-insured plans established or main-
tained by eligible organizations by ensur-
ing that plan participants and beneficiaries
are provided contraceptive coverage at no
cost so that eligible organizations are not
required to administer or fund such cover-
age. By financing the accommodation for
self-insured plans of eligible organizations
through the FFE user fee adjustment, par-
ticipants and beneficiaries in such plans
can retain their existing coverage, while
gaining access to separate payments for
contraceptive services at no cost. HHS
does not believe that the adjustment to
FFE user fee collections, as contemplated
under this final regulation, will materially
undermine FFE operations.
HHS notes that it is not raising the FFE
user fee finalized in the 2014 Payment No-
tice to offset the FFE user fee adjustments,
and estimates that payments for contracep-
tive services will represent only a small
portion of total FFE user fees.
The FFE user fee adjustments sup-
port many of the goals of the Affordable
Care Act, including improving the health
of the population, reducing health care
costs, providing access to health cover-
age, encouraging eligible organizations
to continue to offer health coverage, and
ensuring access to affordable qualified
health plans (QHPs) via efficiently oper-
ated Exchanges. Moreover, as described
earlier in these final regulations, there
are significant benefits associated with
contraceptive coverage without cost shar-
ing. Such coverage significantly furthers
the governmental interests in promoting
public health and gender equality, and
promotes the underlying goals of the Ex-
changes and the Affordable Care Act more
generally.
43
45 CFR 147.147 (77 FR 16453).
44
The FFE user fee was established in the March 11, 2013 final rule entitled “Patient Protection and Affordable CareAct; HHS Notice of Benefit and Payment Parameters for 2014” (78 FR
15410) (2014 Payment Notice).
July 29, 2013992013–31 I.R.B.

In §156.50(d) of the proposed regula-
tions, HHS specified that, if an issuer were
to provide contraceptive coverage to par-
ticipants and beneficiaries in self-insured
plans of eligible organizations at no cost,
and the issuer offers coverage through an
FFE, the issuer would be able to seek an
adjustment to the FFE user fee for the esti-
mated cost of the contraceptive coverage.
Moreover, HHS proposed that, if the is-
suer providing the contraceptive coverage
did not offer coverage through an FFE —
either because it was not a QHP issuer,
or because it was a QHP issuer but oper-
ated in a state without an FFE — an is-
suer in the same issuer group that offered
coverage through an FFE would have been
able to seek an adjustment to the FFE user
fee on behalf of the issuer providing the
contraceptive coverage. HHS proposed to
use the definition of issuer group in 45
CFR 156.20, that is, all entities treated un-
der subsection (a) or (b) of section 52 of
theCodeasamemberofthesamecon-
trolled group of corporations as (or under
common control with) ahealth insurance
issuer, or issuers affiliated by the com-
mon use of a nationally licensed service
mark. Several commenters expressed con-
cern that not every issuer seeking to pro-
vide contraceptive coverage to participants
and beneficiaries in self-insured plans of
eligible organizations would be in the same
issuer group as an issuer that offers cover-
age through an FFE. Commenters further
noted that, even if the issuer providing the
contraceptive coverage and the issuer of-
fering coverage through an FFE were in
the same issuer group, the issuers might in-
cur significant administrative costs in es-
tablishing the necessary arrangements.
In response to these comments, and to
account for the payments for contraceptive
services for participants and beneficiaries
in self-insured group health plans of eligi-
ble organizationsunder the accommoda-
tion described previously, HHS is finaliz-
ing a modification of the proposed policy.
In §156.50(d)(1), a participating issuer
(defined at 45 CFR 156.50(a)
45
)offering
a plan through an FFE may qualify for an
adjustment to the FFE user fee to the ex-
tent that the participating issuer either: (i)
made payments for contraceptive services
on behalf of a third party administrator pur-
suant to 26 CFR 54.9815–2713A(b)(2)(ii)
or 29 CFR 2590.715–2713A(b)(2)(ii);
or (ii) seeks an adjustment to the FFE
user fee with respect to a third party
administrator that, following receipt of
a copy of the self-certification refer-
enced in 26 CFR 54.9815–2713A(a)(4)
or 29 CFR 2590.715–2713A(a)(4), made
or arranged for payments for contra-
ceptive services pursuant to 26 CFR
54.9815–2713A(b)(2)(i) or (ii) or 29 CFR
2590.715–2713A(b)(2)(i) or (ii). Under
the final regulation, neither the third party
administrator, nor the participating is-
suer, nor any entity providing payments
for contraceptive services (if neither the
third party administrator nor the partici-
pating issuer is providing such payments)
is required to be part of the same issuer
group or otherwise affiliated. This mod-
ification allows greater flexibility in the
arrangements among third party adminis-
trators, issuers, and other entities, while
still ensuring that eligible organizations
are not required to contract, arrange, pay,
or refer for contraceptive coverage. Con-
sistent with the proposed regulations, an
allowance for administrative costs and
margin in the FFE user fee adjustment
accounts for the costs of arrangements
among the third partyadministrator, the
participating issuer, and any other en-
tity providing payments for contraceptive
services (if neither the third party ad-
ministrator nor the participating issuer is
providing such payments).
In §156.50(d)(1) through (4) of the pro-
posed regulations, HHS set forth a process
through which an issuer seeking an FFE
user fee adjustment would submit informa-
tion to HHS to demonstrate the provision
of contraceptive coverage and estimate the
cost of such coverage. HHS further pro-
posed that it would review this information
and provide an adjustment to the issuer’s
monthly obligation to pay the FFE user fee
in an amount equal to the approved esti-
mated cost of the contraceptive coverage.
HHS suggested that the cost of the contra-
ceptive coverage, including administrative
costs and margin, could be estimated on
a per capita basis by either the issuer or
HHS using either actuarial principles and
methodologies or, for 2016 and beyond,
previous experience. The per capita rate
would then be multiplied by the monthly
enrollment in the contraceptive coverage
in order to calculate the total FFE user fee
adjustment.
HHS sought comments on this pro-
posed process for collecting information,
calculating the cost of the contraceptive
coverage, and applying the FFE user fee
adjustment. HHS received several com-
ments suggesting that issuers should be
required to submit information only on an
annual basis, rather than a monthly basis,
to reduce the administrative burden. Com-
menters also noted that it would likely
be difficult to estimate the cost of the
contraceptive coverage accurately, partic-
ularly in the initial years, given that the
prohibition on cost sharing could affect
utilization. In addition, commenters noted
that costs would likely vary considerably
based on differences in utilization patterns
and administrative processes.
In response to these comments, HHS
is making certain modifications to the
process described previously. Rather
than using a monthly process, the final
regulation at §156.50(d)(2) requires a par-
ticipating issuer seeking an FFE user fee
adjustment to submit to HHS, in the year
following the calendar year in which the
contraceptive services for which payments
were made under the accommodation de-
scribed previously were provided, for each
self-insured plan, the total dollar amount
of the payments for contraceptive services
that were provided during the applicable
calendar year. The issuer will then receive
an adjustment to its obligation to pay the
FFE user fee equal to the cost of the contra-
ceptive services that were provided during
the previous year, plus an allowance, as
specified by HHS, for administrative costs
and margin. For example, HHS expects
that issuers seeking an FFE user fee ad-
justment for payments for contraceptive
services that were provided in calendar
year 2014 will be required to submit to
HHS by July 15, 2015, the total dollar
amount of the payments. This timing will
allow adequate time for claims run-out and
data collection. The FFE user fee adjust-
ment will be applied starting in October
2015. Although this approach delays the
application of the FFE user fee adjustment,
it significantly reduces the administrative
45
Under 45 CFR 156.50(a), a participating issuer includes QHP issuers, issuers of multi-state plans, and issuers of stand-alone dental plans. We note that an issuer of a Consumer Operated
and Oriented Plan (CO-OP) offered on an FFE is also considered to bea participating issuer for the purpose of the FFE user fee adjustment.
2013–31 I.R.B.100July 29, 2013

burden on issuers, third party administra-
tors, and HHS. HHS believes that tying
the FFE user fee adjustment to the actual
costs of payments for contraceptive ser-
vices, plus an allowance for administrative
costs and margin, will provide reasonable
assurance that the adjustment is adequate
to cover the full costs of the payments
for contraceptive services, furthering the
goal of providing contraceptive coverage
without cost sharing,as required by PHS
Act section 2713 and the companion pro-
visions in ERISA and the Code.
As discussed later in this section, HHS
is also directing thirdparty administrators
to submit to HHS a notification that the
third party administrator intends for a par-
ticipating issuer to seek an FFE user fee
adjustment. This notification must be pro-
vided by the later of January 1, 2014, or
the 60
th
calendar day following the date
on which the third party administrator re-
ceives a copy of a self-certification from
an eligible organization. The notification
must be provided whether it is intended
that the participating issuer will provide
payments for contraceptive services on be-
half of the third party administrator, or
whether it is intended that the participat-
ing issuer will seek an adjustment to the
FFE user fee with respect to such payments
made or arranged for by the third party ad-
ministrator. HHS will provide guidance on
the manner of submission of the notifica-
tion, as well as guidance on the application
for the FFE user fee adjustment, through
the process provided for under the Paper-
work Reduction Act of 1995.
HHS is also modifying the standards
proposed at §156.50(d) to align with the
final regulations regarding the accommo-
dation for self-insured group health plans
of eligible organizations. As discussed
previously, under these final regulations,
the third party administrator may make the
payments for contraceptive services itself,
or it may arrange for an issuer (includ-
ing an issuer that does not offer cover-
age through an FFE) or another entity to
make the payments on its behalf. Under
either scenario, a third party administrator
that seeks to offset the costs of such pay-
ments through an FFE user fee adjustment
must enter into an arrangement with a par-
ticipating issuer offering coverage through
an FFE. The participating issuer and the
third party administrator must each sub-
mit information to HHS, as described in
§156.50(d)(2) of the final regulation, to
verify that the payments for contraceptive
services were provided in accordance with
these final regulations.
Specifically, in §156.50(d)(2)(i), HHS
finalizes submission standards for a par-
ticipating issuer to receive the FFE user
fee adjustment. The participating issuer
must submit to HHS, in the manner and
timeframe specified by HHS, in the year
following the calendar year in which the
contraceptive services were provided:
(A) identifying information for the par-
ticipating issuer and each third party
administrator that received a copy of the
self-certification with respect to which the
participating issuer seeks an adjustment
in the FFE user fee (whether or not the
participating issuer was the entity that
made the payments for contraceptive ser-
vices); (B) identifying information for
each self-insured group health plan with
respect to which a copy of the self-cer-
tification was received by a third party
administrator and with respect to which
the participating issuer seeks an adjust-
ment in the FFE user fee; and (C) for each
such self-insured group health plan, the
total dollar amount of the payments for
contraceptive services that were provided
during the applicable calendar year under
the accommodation described previously.
If such payments were made by the par-
ticipating issuer directly, the total dollar
amount should reflect the amount of the
payments made by the participating is-
suer; if the third party administrator made
or arranged for such payments, the total
dollar amount should reflect the amount
reportedtotheparticipatingissuerbythe
third party administrator. Similarly, in
§156.50(d)(2)(ii) and (iii), HHS finalizes
submission standards for the third party
administrator with respect to which the
participating issuer seeks an adjustment in
the FFE user fee. In paragraph (d)(2)(ii),
HHS finalizes a standard under which the
third party administrator must notify HHS,
by the later of January 1, 2014, or the
60
th
calendar day following the date on
which it receives the applicable copy of the
self-certification, thatit intends to arrange
for a participating issuer to seek an FFE
user fee adjustment. HHS will provide
guidance on the manner of this submission
through the process provided for under the
Paperwork Reduction Act of 1995. This
notification is necessary to allow HHS to
coordinate the development of the systems
for administering the FFE user fee adjust-
ment. In paragraphs (d)(2)(iii)(A) through
(E), HHS specifies several other standards
under which the third party administrator
must submit to HHS, in the year following
the calendar year in which the contracep-
tive services for which payments were
made under the accommodation described
previously were provided, the following
information: (A) identifying informa-
tion for the third party administrator and
the participating issuer; (B) identifying
information for eachself-insured group
health plan with respect to which the par-
ticipating issuer seeks an adjustment in
the FFE user fee; (C) the total number
of participants and beneficiaries in each
self-insured group health plan during the
applicable calendar year;
46
(D) for each
self-insured group health plan with respect
to which the third party administrator
made payments for contraceptive services,
the total dollar amount of such payments
that were provided during the applicable
calendar year under the accommodation
described previously (if such payments
were made by the participating issuer
directly, the total dollar amount should
reflect the amount reported to the third
party administrator by the participating is-
suer; if the third partyadministrator made
or arranged for such payments, the total
dollar amount should reflect the amount
of the payments made by or on behalf of
the third party administrator); and (E) an
attestation that the payments for contra-
ceptive services were made in compliance
with 26 CFR 54.9815–2713A(b)(2) or 29
CFR 2590.715–2713A(b)(2). If the third
party administrator does not meet these
standards, the participating issuer may
not receive an FFE user fee adjustment
to offset the costs of the payments for
contraceptive services incurred by or on
behalf of the third party administrator.
HHS believes that it is necessary to collect
this information directly from the third
party administrator that has the duty to
ensure that the payments for contraceptive
services are made to ensure the accuracy
of the data provided, without requiring the
46
No personally identifiable information will be collected from participating issuers or third party administrators pursuant to §156.50(d)(2).
July 29, 20131012013–31 I.R.B.

participating issuer toattest to information
to which it may not have access or over
which it has little control.
In §156.50(d)(3), HHS establishes the
process by which a participating issuer will
be provided a reduction in its obligation
to pay the FFE user fee. As long as an
authorizing exception under OMB Circu-
lar No. A–25R is in effect, the reduction
will be calculated as the sum of the to-
tal dollar amount of the payments for con-
traceptive services submitted by the ap-
plicable third party administrators, as de-
scribed in paragraph (d)(2)(iii)(D), and an
allowance, specified by HHS, for admin-
istrative costs and margin. In the pro-
posed regulations, HHS requested com-
ments on the appropriate method for de-
termining the administrative costs associ-
ated with providing the contraceptive cov-
erage, as well as a margin to ensure that
issuers receive appropriate compensation
for providing the contraceptive coverage.
Commenters agreed with the proposal to
reimburse for administrative costs and to
provide a margin. Commenters noted that
administrative costs would be incurred be-
cause of the complexities inherent in ar-
rangements between entities seeking the
FFE user fee adjustment and entities pro-
viding the contraceptive coverage, partic-
ularly when the entities operate in different
states. In addition, commenters stated that
administrative costs incurred by the third
party administrators could vary because of
variations in billing processes.
As finalized in this regulation, for the
initial years of this policy, HHS will spec-
ify an allowance for administrative costs
and margin, which will be incorporated
into the FFE user fee adjustment, rather
than request the third party administra-
torortheparticipatingissuertosubmitto
HHS an estimate of the third party admin-
istrator and the participating issuer’s ad-
ministrative costs. This approach is con-
sistent with the general approach in these
final regulations to simplify administration
of the accommodations for eligible organi-
zations, while still ensuring that no eligi-
ble organization is required to contract, ar-
range, pay, or refer for contraceptive cov-
erage. HHS notes that it intends to re-
view the methodology for determining re-
imbursement for administrative costs and
margin in future years to ensure that HHS
is accurately capturing these costs. HHS
will establish the allowance as a percent-
age of the cost of the payments for con-
traceptive services because HHS believes
that the majority of administrative costs
will be related to processing of payments
to providers for contraceptive services, and
because HHS believes that it is reasonable
to measure margin on this business as a
percentage of the cost of the contraceptive
services. HHS will establish the allowance
at no less than ten percent of such cost, and
will specify the allowance for a particular
calendar year in the annual HHS notice of
benefit and payment parameters. The spe-
cific allowance for the 2014 calendar year
will be proposed for public comment in the
HHS Notice of Payment and Benefit Pa-
rameters for 2015 (which is scheduled to
be published in the fall of 2013). This ap-
proach will allow HHS to provide for a rea-
sonable allowance for administrative ex-
penses for the third party administrator, the
participating issuer, and any other entity
providing the payments for contraceptive
services on behalf of the third party admin-
istrator, as well as a margin for each en-
tity. HHS welcomes feedback from third
party administrators, participating issuers,
and other relevant stakeholders on the al-
lowance for administrative costs and mar-
gin, including the appropriate percentage
and alternative methods for future determi-
nation of the allowance for administrative
costs and margin.
Section 156.50(d)(4) is similar to the
corresponding proposed provision, and
specifies that, as long as an exception
under OMB Circular No. A–25R is in
effect, if the amount of the reduction un-
der paragraph (d)(3) is greater than the
amount of the obligation to pay the FFE
user fee in a particular month, the partic-
ipating issuer will be provided a credit in
succeeding months in the amount of the
excess. HHS notes that the likelihood of
this occurring will depend on the relative
magnitudes of the cost of payments for
contraceptive services and the FFE user
fee, the number of participants and bene-
ficiaries in self-insured plans with respect
to which the participating issuer seeks an
adjustment in the FFE user fee, and the
number of individuals enrolled in cover-
age offered by the issuer through the FFE.
HHS also notes that it intends to provide
a monthly report, for the initial month in
which the FFE user fee adjustment for a
particular calendar year is applied, and for
succeeding months until the credit is fully
applied, to issuers that receive an FFE
user fee adjustment. HHS contemplates
that this monthly report will include infor-
mation on the issuer’s user fee obligation
for the month, its total adjustment for the
applicable calendar year, the user fee ad-
justment applied to date, and the value
oftheadjustmenttobecreditedtofuture
months (so long as the exception under
OMB Circular No. A–25R is in effect).
Additionally, HHS intends to provide a
monthly report to eachapplicable third
party administrator detailing any FFE user
fee adjustment that will be provided to
a participating issuer with respect to the
costs for contraceptive services incurred
by or on behalf of the third party adminis-
trator, as well as the portion of the user fee
adjustment applied to date.
Section 156.50(d)(5) specifies that,
within 60 calendar days of receipt of any
adjustment in the FFE user fee, a partic-
ipating issuer must pay each third party
administrator with respect to which it re-
ceived any portion of such adjustment an
amount no less than the portion of the
adjustment attributable to the total dollar
amount of the payments for contracep-
tive services submitted by the third party
administrator, as described in paragraph
(d)(2)(iii)(D). HHS expects that the partic-
ipating issuer will also agree to pay each
third party administrator a portion of such
allowance (and that the apportionment
will be negotiated between the entities);
HHS does not specify such payment in
this final regulation, as HHS expects the
entities to work out an arrangement that
best fits their situation. Finally, HHS notes
that this provision does not apply if the
participating issuer made the payments
for contraceptive services on behalf of the
third party administrator, as described in
paragraph (d)(1)(i), or is in the same issuer
group (as defined in 45 CFR 156.20) as
the third party administrator.
In §156.50(d)(6) and (7), HHS estab-
lishes standards relating to documentation
and program integrity, similar to those
proposed in §156.50(d)(5), but modified
slightly to align with the other changes in
this final regulation. In paragraph (d)(6),
HHS specifies that a participating issuer
receiving an adjustment in the FFE user
fee under this section for a particular cal-
endar year must maintain for 10 years
following that year, and make available
upon request to HHS, the HHS Office of
2013–31 I.R.B.102July 29, 2013

the Inspector General, the Comptroller
General, and their designees, documen-
tation demonstrating that it timely paid
each third party administrator, with re-
spect to which it received such adjustment,
any amount required under paragraph
(d)(5). In paragraph(d)(7), HHS specifies
documentation standards for third party
administrators with respect to which an
FFE user fee adjustment is received under
this section for a particular calendar year.
Third party administrators must main-
tain for 10 years following the applicable
calendar year, and make available upon
request to HHS, the HHS Office of the In-
spector General, the Comptroller General,
and their designees, all of the following:
(i) a copy of the self-certification pro-
vided by the eligible organization for each
self-insured plan with respect to which an
adjustment is received;(ii) documentation
demonstrating that the payments for con-
traceptive services were made in compli-
ance with 26 CFR 54.9815–2713A(b)(2)
or 29 CFR 2590.715–2713A(b)(2); and
(iii) documentation supporting the to-
tal dollar amount of the payments for
contraceptive services submitted by the
third party administrator, as described
in paragraph (d)(2)(iii)(D). Although a
commenter argued that the documentation
retention standards should be shortened
from 10 years to 6 years, to align with
ERISA standards, we believe that the fi-
nalized standard is appropriate as it aligns
with timeframes under the False Claims
Act, 31 U.S.C. 3729–3733, and stan-
dards used for other Exchange programs.
HHS notes that a participating issuer or a
third party administrator may satisfy these
standards by archiving these records and
ensuring that they are accessible if needed
in the event of an investigation, audit, or
other review.
To summarize, costs of payments made
for contraceptive services for participants
and beneficiaries inself-insured group
health plans of eligible organizations under
the accommodation described previously
will be reimbursed through an adjustment
in FFE user fees as follows:
•Theadjustmentwillbemadetothe
FFE user fees of a participating is-
suer, if that participating issuer made
the payments for the contraceptive ser-
vices under the accommodation on be-
half of the third party administrator, or
if it seeks the adjustment with respect
to such payments made or arranged for
by the third party administrator.
•A third party administrator must no-
tify HHS that it intends for a participat-
ing issuer to seek the adjustment by the
later of January 1, 2014, or the 60
th
cal-
endar day following the date on which
it received the copyof the applicable
self-certification.
•For the participating issuer to re-
ceive the adjustment, the third party
administrator andthe participating
issuer must notify HHS of the total
amount of the payments made for
the contraceptive services under the
accommodation, and provide certain
other information and documenta-
tion, including an attestation by the
third party administrator that the pay-
ments for the contraceptive services
were provided in compliance with 26
CFR 54.9815–2713A(b)(2) or 29 CFR
2590.715–2713A(b)(2), by July 15 of
the year following the calendar year in
which the contraceptive services were
provided.
•If the necessary conditions are met, and
if an exception under OMB Circular
No. A–25R is in effect, the participat-
ing issuer will receive an adjustment to
its FFE user fee obligation equal to the
total amount of the payments for the
contraceptive services provided under
the accommodation, plus an allowance
for administrative costs and margin. If
the adjustment exceeds the FFE user
fees owed in the month of the initial
adjustment, any excess adjustment will
be carried over to later months, for so
long as the exception under OMB Cir-
cular No. A–25R is in effect.
•The allowance, which will be at least
ten percent of the costs of the payments
for the contraceptive services under the
accommodation, will be specified by
HHS in the annual HHS notice of ben-
efit and payment parameters.
•Within 60 days of receipt of any ad-
justment, the participating issuer must
pay the third party administrator the
portion of the adjustment attributable
to payments for contraceptive services
made by the third party administra-
tor. No payment is required with re-
spect to the allowance for administra-
tive costs and margin, although it is ex-
pected that the participating issuer will
agree to pay each third party adminis-
trator a portion of such allowance. In
addition, no payment is required if the
participating issuer made the payments
for the contraceptive services under the
accommodation on behalf of the third
party administrator, or if the participat-
ing issuer and third party administrator
are in the same issuer group.
Lastly, in response to comments re-
ceived, HHS is finalizing a provision
clarifying that participating issuers may
add any amounts paid out to a third
party administrator or incurred by or for
the participating issuer in contraceptive
claims costs under the accommodation for
self-insured group health plans of eligi-
ble organizations provided in these final
regulations, plus the allowance for admin-
istrative costs and margin provided under
45 CFR 156.50(d)(3)(ii), to their net FFE
user fee paid to HHS, in calculations re-
lating to the index rate for the single risk
pool under 45 CFR 156.80(d), the medical
loss ratio under 45 CFR part 158, and the
risk corridors program under 45 CFR 153
subpart F. Several commenters noted that
improperly incorporating the FFE user fee
adjustment provided for under the final
regulation into these calculations could
lead to unintended consequences. For
example, if a participating issuer were
required to incorporate the FFE user fee
adjustment into the calculation of the
medical loss ratio, but not allowed to in-
corporate the cost of the accommodation
for self-insured group health plans of eli-
gible organizations, the adjustment would
reduce the amount reported as licensing
and regulatory fees (as described in 45
CFR 158.161(a)). This would result in
a lower medical loss ratio. HHS agrees
that such a result would not accurately
reflect the ratio of claims to premiums, as
estimated by the medical loss ratio, for the
participating issuer’s insurance business,
because the FFE user fee adjustment oc-
curs due to activity not directly related to
the participating issuer’s insurance busi-
ness. Indeed, under§156.50(d)(5), the
participating issuer is required in many
circumstances to pay out the greater share
of the FFE user fee adjustments to third
party administrators responsible for mak-
ing (or arranging for another entity to
make) the payments for contraceptive
services. Therefore, HHS clarifies that,
July 29, 20131032013–31 I.R.B.

for purposes of the medical loss ratio and
the risk corridors program, participating
issuers should report the sum of: (1) the
net FFE user fee paid to HHS; (2) any
amounts paid out to a third party adminis-
trator or incurred by or for the participating
issuer in contraceptive claims costs un-
der the accommodation for self-insured
group health plans of eligible organiza-
tions provided in these final regulations;
and (3) the allowance for administrative
costs and margin provided under 45 CFR
156.50(d)(3)(ii), as licensing and regula-
tory fees referenced in 45 CFR 158.161(a),
or taxes and regulatory fees in the case
of the risk corridors program. For similar
reasons, HHS is modifying the provision
at 45 CFR 156.80(d) to clarify that, for
the purpose of establishing a single risk
pool index rate for a state market, any
market-wide adjustments to the index rate
for expected Exchange user fees should
include: (1) the expected net FFE user
feetobepaidtoHHS;(2)anyamounts
paid out to a third party administrator or
incurred by or for the participating issuer
in contraceptive claims costs under the ac-
commodation for self-insured group health
plans of eligible organizations expected to
be credited against user fees payable for
that state market; and (3) the allowance for
administrative costs and margin provided
under 45 CFR 156.50(d)(3)(ii) expected
to be credited against user fees payable for
that state market.
HHS clarifies that, if an issuer provides
payments for contraceptive services on be-
half of a third party administrator, such
payments are not directly linked to any of
the health insurance coverage provided by
the issuer, and the issuer should not incor-
porate the cost of such payments into their
calculations for the numerator with respect
to the medical loss ratio or the risk corri-
dors program.
D. Treatment of Multiple Employer Group
Health Plans
In the case of several employers offer-
ing coverage through a single group health
plan, the Departments proposed that each
employer be required to independently
meet the definition of religious employer
or eligible organization in order to avail
itself of the exemption or an accommoda-
tion with respect to its employees and their
covered dependents. Several commenters
supported the proposed approach of apply-
ing the exemption andthe accommodation
on an employer-by-employer basis. Other
commenters favored a plan-based ap-
proach, allowing any employer offering
coverage through the same group health
plan as a religious employer or eligible or-
ganization to qualify for the exemption or
the accommodation, citing administrative
challenges to an employer-by-employer
approach. A few commenters recom-
mended criteria for determining whether
an employer is affiliated with a religious
employer or eligible organization with
which it offers coverage through a single
group health plan, such as the control stan-
dards in Code section 52(a) and (b), and
therefore qualified for the exemption or an
accommodation.
47
The final regulations continue to pro-
vide that the availability of the exemp-
tion or an accommodation be determined
on an employer-by-employer basis, which
the Departments continue to believe best
balances the interests of religious employ-
ers and eligible organizations and those of
employees and their dependents. The De-
partments are clarifying that, for purposes
of these final regulations, any nonprofit
organization with religious objections to
contraceptive coverage that is part of the
same controlled group of corporations or
part of the same group of trades or busi-
nesses under common control (each within
the meaning of section 52(a) or (b) of the
Code) with a religious employer and/or an
eligible organization, and that offers cov-
erage through the same group health plan
as such religious employer and/or eligible
organization, is considered to hold itself
out as a religious organization and there-
fore qualifies for an accommodation un-
der these final regulations. Each such or-
ganization must independently satisfy the
self-certification standard.
E. Religious Freedom Restoration Act and
Other Federal Law
Some commenters expressed concerns
about the proposed accommodations for
eligible organizations under the Religious
Freedom Restoration Act (RFRA) (Pub. L.
103–141) 107 Stat. 1488 (1993) (codified
at 42 U.S.C. 2000bb–1).
48
All such con-
cerns were considered. But the accom-
modations for group health plans estab-
lished or maintained by eligible organiza-
tions (and group health insurance coverage
provided in connection with such plans),
or student health insurance coverage ar-
ranged by eligible organizations that are
institutions of higher education, are not re-
quired under RFRA. In addition, the ac-
commodations for eligible organizations
under these final regulations do not vio-
late RFRA because they do not substan-
tially burden religious exercise, and they
serve compelling government interests and
moreover are the least restrictive means to
achieve those interests.
First, some commenters asserted that
the proposed accommodations would sub-
stantially burden their exercise of religion
by requiring their involvement in provid-
ing coverage of medical services to which
they object on religious grounds. These fi-
nal regulations do not require eligible orga-
nizations that provideself-certifications to
their issuers or third party administrators to
provide health coverage that includes ben-
efits for contraceptive services, or to con-
tract, arrange, pay, or refer for such cov-
erage or services. Issuers and third party
administrators cannot pass along the costs
because these final regulations specifically
prohibit an issuer or third party adminis-
trator from charging any premium or oth-
erwise passing on any cost relating to pay-
ments for contraceptive services to an eli-
gible organization. Thus, there is no bur-
den on any religious exercise of the eli-
gible organization. And even if the ac-
commodations were found to impose some
minimal burden on eligible organizations,
any such burden would not be substantial
for the purposes of RFRA because a third
party pays for the contraceptive services
and there are multiple degrees of separa-
47
Code section 52(a) generally provides that all employees of all corporations that are members of the same controlled group of corporations, including corporations that are at least 50 percent
controlled by a common parent corporation, are treated as employed by a single employer. Code section 52(b) generally provides that all employees of trades or businesses (whether or not
incorporated) that are under common control are treated as employed by a single employer.
48
RFRA provides that the federal government generally may not “substantially burden a person’s exercise of religion, even if the burden results from a rule of general applicability,” unless
the burden: “(1) is in furtherance of a compellinggovernmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest,” 42 U.S.C. 2000bb–1.
2013–31 I.R.B.104July 29, 2013

tion between the eligible organization and
any individual’s choice to use contracep-
tive services.
One commenter contended that the
mere act of self-certification would facil-
itate access to contraception, resulting in
violation of its religious beliefs. But the
self-certification under these final regu-
lations simply confirms that an eligible
organization is a nonprofit religious organ-
ization with religious objections to contra-
ceptive coverage and so informs the issuer
or third party administrator. Even prior to
the proposed regulations, because contra-
ceptive benefits are typically in standard
product designs, many eligible organi-
zations directed their issuers and third
party administrators not to make payments
for claims for medical services to which
they object on religious grounds. In any
event, in order for a burden on religious
exercise to be “substantial” under RFRA,
its effects on the objecting person cannot
be as indirect and attenuated as they are
here. Under these final regulations, third
parties, not eligible organizations, provide
the payments for contraceptive services,
at no cost to eligible organizations. And
whether such services will be utilized is
the result of independent choices by em-
ployees or students and their dependents,
who have distinct interests and may have
their own religious views that differ from
those of the eligible organization.
Second, some commenters claimed
that the proposed accommodations would
force them to fund or subsidize contra-
ceptive coverage because issuers or third
party administrators would pass on the
costs of such coverage to eligible orga-
nizations. Again, however, these final
regulations specifically prohibit an issuer
or third party administrator from charging
any premium, or otherwise passing on
any cost, to an eligible organization with
respect to the payments for contraceptive
services.
Third, some commenters asserted that
the contraceptive coverage requirement
fails to serve any compelling government
interest. As noted previously, however, the
contraceptive coverage requirement serves
two compelling governmental interests.
The contraceptive coverage requirement
furthers the government’s compelling in-
terest in safeguarding public health by
expanding access to and utilization of
recommended preventive services for
women. HHS tasked IOM with conduct-
ing an independent, science-based review
of the available literature to determine
what preventive services are necessary for
women’s health and well-being. IOM in-
cluded in its recommendations for compre-
hensive guidelines for women’s preventive
services all FDA-approved contraceptive
methods, sterilization procedures, and pa-
tient education and counseling for women
with reproductive capacity. IOM deter-
mined that lack of access to contraceptive
services has proven in many cases to have
serious negative health consequences for
women and newborn children.
The government also has a compelling
interest in assuring that women have equal
access to health care services. Women
would be denied the full benefits of pre-
ventive care if their unique health care
needs were not considered and addressed.
For example, prior to the implementation
of the preventive services coverage provi-
sion, women of childbearing age spent 68
percent more on out-of-pocket health care
costs than men, and these costs resulted
in women often forgoing preventive care.
The IOM found that this disproportionate
burden on women imposed financial bar-
riers that prevented women from achiev-
ing health outcomes on an equal basis with
men. The contraceptivecoverage require-
ment helps remedy this problem by help-
ing to equalize the provision of preventive
health care services to women and, as a re-
sult, helping women contribute to society
to the same degree as men.
Fourth, some commenters suggested
that certain provisions of the Affordable
Care Act that, in their view, leave some
women without contraceptive coverage
with no cost sharing demonstrate that the
government interests in providing such
coverage cannot be truly compelling. But
these commenters misunderstand the ef-
fect of these provisions.
49
Nor do the exemption for religious
employers and the accommodations for
eligible organizations undermine the gov-
ernment’s compelling interests. With
respect to the religious employer ex-
emption, houses of worship and their
integrated auxiliaries that object to con-
traceptive coverage on religious grounds
are more likely than other employers to
employ people who are of the same faith
and/or adhere to the same objection, and
who would therefore be less likely than
other people to use contraceptive services
even if such services were covered under
their plan. Under the eligible organiza-
tion accommodations, individuals in plans
of eligible organizations, who are less
likely than individuals in plans of reli-
gious employers to share their employer’s
(or institution of higher education’s) faith
and objection to contraceptive coverage
on religious grounds, will still benefit
from payments for contraceptive services,
even though such payments will not be
provided, funded, or subsidized by their
employer (or institution of higher educa-
tion).
Fifth, some commenters asserted that
the contraceptive coverage requirement
is not the least restrictive means of ad-
vancing these compelling interests, and
proposed various alternatives to these
regulations. All of these proposals were
considered, and it was determined that
they were not feasible and/or would not
advance the government’s compelling in-
terests as effectively as the mechanisms
established in these final regulations and
the preventive services coverage regula-
tions more generally. For example, some
commenters suggested that the govern-
ment could provide contraceptive services
to all women free of charge (through
Medicaid or another program), establish
a government-funded health benefits pro-
gram for contraceptive services, or force
49
For example, the Affordable Care Act’s grandfathering provision is only transitional in effect, and it is expected that a majority of plans will lose their grandfathered status by the
end of 2013. (75 FR 34552; June 17, 2010);see alsoKaiser Family Found. & Health Res. & Ed. Trust, Employer Health Benefits 2012 Annual Survey at 7–8, 190, available at
http://ehbs.kff.org/pdf/2012/8345.pdf. Moreover, small employers that elect to offer non-grandfathered health coverage to their employees are not exempt from the requirement under the
preventive health services coverage regulations to provide coverage for recommended preventive health services, including contraceptive services, without cost sharing (subject to the
religious employer exemption and eligible organization accommodations inthese final regulations). While the Affordable Care Act excludes small employers from the possibility of tax
liability under the employer shared responsibility provision at Code section 4980H, it encourages such employers to offer health coverage to their employees by establishing new group
health insurance options through the SHOPs, as well as new tax incentives to exercise such options. With respect to employees of small employers that do not offer health coverage to their
employees, the Affordable Care Act establishes new individual health insurance options through the Exchanges, as well as new tax credits to assist the purchase of such insurance; such
insurance will cover recommended preventive services, including contraceptive services, without cost sharing.
July 29, 20131052013–31 I.R.B.

drug and device manufacturers to provide
contraceptive drugs and devices to women
for free. The Departments lack the statu-
tory authority and funding to implement
these proposals. Moreover, the Affordable
Care Act contemplates providing cover-
age of recommended preventive services
through the existing employer-based sys-
tem of health coverage so that women
face minimal logistical and administrative
obstacles. Imposing additional barriers to
women receiving the intended coverage
(and its attendant benefits), by requiring
them to take steps to learn about, and to
sign up for, a new health benefit, would
make that coverage accessible to fewer
women. The same concern undermines
the effectiveness of other commenters’
suggestion that the government require the
multi-state plans on the Exchanges to offer
a stand-alone, contraceptive-only benefit
to all women without charge.
For another example, some com-
menters suggested that the government
should establish tax incentives for women
to use contraceptive services. Again, the
Departments lack the statutory authority to
implement such proposal. Reliance only
on tax incentives would also depart from
the existing employer-based system of
health coverage, would require women to
pay out of pocket for their care in the first
instance, and would not benefit women
who do not have sufficient income to be
required to file a tax return. Such barriers
would make a tax incentive structure less
effective than the employer-based system
of health coverage in advancing the gov-
ernment’s compelling interests.
Finally, some commenters expressed
concern that the final regulations violate
the Religion Clauses of the First Amend-
ment or certain federal restrictions relating
to abortion. The regulations do not violate
the Free Exercise Clause because they
are neutral and generally applicable. The
regulations do not target religiously mo-
tivated conduct, but rather, are intended
to improve women’s access to preven-
tive health care and lessen the disparity
between men’s and women’s health care
costs. And the regulations are generally
applicable because they do not pursue
their purpose only against conduct moti-
vated by religious belief. The exemption
and accommodations set forth in the regu-
lations serve to accommodate religion, not
to disfavor it.
The final regulations also do not violate
the Establishment Clause. The exemption
and accommodations setforth in the regu-
lations are not restricted to organizations
of a particular denomination or denomi-
nations. Instead, they are available on an
equal basis to religious organizations affil-
iated with any and all religions.
Finally, the regulations do not violate
federal restrictions relating to abortion be-
cause FDA-approved contraceptive meth-
ods, including Plan B, Ella, and IUDs,
are not abortifacients within the meaning
of federal law. (62 FR 8611; February
25, 1997) (“Emergency contraceptive pills
are not effective if the woman is preg-
nant[.]”); 45 CFR 46.202(f) (“Pregnancy
encompasses the period of time from im-
plantation until delivery.”). Further, these
regulations do not require nonprofit reli-
gious organizations that object to such con-
traceptive methods to contract, arrange,
pay, or refer for such services.
F. No Effect on Other Law
The religious employer exemption and
eligible organization accommodations un-
der these final regulations are intended to
have meaning solely with respect to the
contraceptive coverage requirement under
section 2713 of the PHS Act and the com-
panion provisions of ERISA and the Code.
Whetheranemployerororganization(in-
cluding an institution of higher education)
is designated as religious for this purpose
is not intended as a judgment about the
mission, sincerity, orcommitment of the
employer or organization (including an in-
stitution of higher education), or intended
to differentiate among the religious merits,
mission, sincerity, commitment, or pub-
lic or private standing of religious enti-
ties. The use of such designation is lim-
ited solely to defining the class of em-
ployers or organizations (including insti-
tutions of higher education) that qualify
for the religious employer exemption and
eligible organization accommodations un-
der these final regulations. The definition
of religious employer or eligible organiza-
tion in these final regulations should not
be construed to apply with respect to, or
relied upon for the interpretation of, any
other provision of the PHS Act, ERISA,
the Code, or any other provision of fed-
eral law, nor is it intended to set a prece-
dent for any other purpose. For example,
nothing in these final regulations should be
construed as affecting the interpretation of
federal or state civil rights statutes, such as
Title VII of the Civil Rights Act of 1964 or
Title IX of the Education Amendments of
1972.
Furthermore, nothing in these final
regulations precludes employers or oth-
ers from expressing any opposition to the
use of contraceptives; requires anyone
to use contraceptives; or requires health
care providers to prescribe or provide
contraceptives if doing so is against their
religious beliefs.
The Departments received several
comments requesting clarification about
whether the religious employer exemption
and eligible organization accommodations
in these final regulations supersede state
laws that require health insurance issuers
to provide contraceptive coverage. The
preemption provisions of section 731 of
ERISA and section 2724 of the PHS Act
(implemented at 29 CFR 2590.731(a) and
45 CFR 146.143(a)) apply such that the
requirements of part 7 of ERISA and ti-
tle XXVII of the PHS Act are not to be
“construed to supersede any provision of
state law which establishes, implements,
or continues in effect any standard or
requirement solely relating to health in-
surance issuers in connection with group
or individual health insurance coverage
except to the extent that such standard or
requirement prevents the application of a
requirement” of federal law. With respect
to issuers subject to state law, insurance
laws that provide greater access to con-
traceptive coverage than federal standards
are unlikely to “prevent the application
of” the preventive services coverage pro-
vision, and therefore are unlikely to be
preempted by these final regulations. On
the other hand, in states with broader re-
ligious exemptionsand accommodations
with respect to health insurance issuers
than those in the final regulations, the
exemptions and accommodations will be
narrowed to align with those in the final
regulations. This is consistent with the ap-
plication of other federal health insurance
standards.
G. Applicability Dates and Transitional
Enforcement Safe Harbor
These final regulations generally apply
to group health plans and health insurance
2013–31 I.R.B.106July 29, 2013

issuers for plan years beginning on or after
January 1, 2014, except the amendments
to the religious employer exemption apply
to group health plans and health insurance
issuers for plan years beginning on or after
August 1, 2013.
The Departments are extending the cur-
rent safe harbor from enforcement of the
contraceptive coverage requirement by the
Departments to encompass plan years be-
ginning on or after August 1, 2013, and be-
fore January 1, 2014. This transitional en-
forcement safe harbor is intended to main-
tain the status quo with respect to organiza-
tions that qualify for the current safe har-
bor during the period that exists between
the expiration of the current safe harbor
50
and the applicability date of the accommo-
dations under these final regulations. This
period is designed to provide issuers and
third party administrators with sufficient
time to prepare to implement the accom-
modations under these final regulations.
Organizations that qualify under the cur-
rent safe harbor are not required to exe-
cute another self-certification if one has
already been executed, but are required
to provide another notice to plan partici-
pants and beneficiaries in connection with
plan years beginning on or after August 1,
2013, and before January 1, 2014. The
guidance extending the current safe harbor
can be found at:www.cms.gov/cciioand
www.dol.gov/healthreform.
IV. Economic Impact and Paperwork
Burden
A. Executive Orders 12866 and 13563
— Department of Health and Human
Services and Department of Labor
Executive Orders 12866 and 13563
direct agencies to assess all costs and ben-
efits of available regulatory alternatives
and, if regulationis necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, and public health and
safety effects; distributive impacts; and
equity). Executive Order 13563 empha-
sizes the importance of quantifying both
costs and benefits, reducing costs, harmo-
nizing rules, and promoting flexibility.
Section 3(f) of Executive Order 12866
defines a “significant regulatory action” as
an action that is likely to result in a regu-
lation: (1) having an annual effect on the
economy of $100 million or more in any
one year, or adversely and materially af-
fecting a sector of the economy, produc-
tivity, competition, jobs, the environment,
public health or safety, or state, local, or
tribal governments or communities (also
referred to as “economically significant”);
(2) creating a serious inconsistency or oth-
erwise interfering with an action taken or
planned by another agency; (3) materially
altering the budgetary impacts of entitle-
ment grants, user fees, or loan programs
or the rights and obligations of recipients
thereof; or (4) raising novel legal or pol-
icy issues arising out of legal mandates, the
President’s priorities, or the principles set
forth in the Executive Order.
A regulatory impact analysis must be
prepared for major rules with econom-
ically significant effects ($100 million
or more in any one year), and an “eco-
nomically significant” regulatory action
is subject to review by the Office of
Management and Budget (OMB). The De-
partments have concluded that these final
regulations are not likely to have economic
impacts of $100 million or more in any
one year, and therefore do not meet the
definition of “economically significant”
under Executive Order 12866.
1. Need for Regulatory Action
As stated earlier in this preamble, the
Departments previously issued amended
interim final regulations authorizing an ex-
emption for group health plans established
or maintained by religious employers (and
group health insurance coverage provided
in connection with such plans) from cer-
tain coverage requirements under section
2713 of the PHS Act (76 FR 46621, Au-
gust 3, 2011). The amended interim fi-
nal regulations were finalized on Febru-
ary 15, 2012 (77 FR 8725). In these final
regulations, the Departments are amending
the definition of religious employer in the
HHS regulation at 45 CFR 147.131(a) (in-
corporated by reference in the regulations
of the Departments of Labor and the Trea-
sury) by eliminating the first three prongs
of the definition of religious employer that
was established in the 2012 final regula-
tions and clarifying the fourth prong. Ac-
cordingly, an employer that is organized
and operates as a nonprofit entity and is re-
ferred to in section 6033(a)(3)(A)(i) or (iii)
of the Code is a religious employer, and its
group health plan qualifies for the exemp-
tion from the requirement to cover con-
traceptive services. In addition, the final
regulations establish accommodations that
provide women with access to such ser-
vices, without cost sharing, while simul-
taneously protecting certain nonprofit re-
ligious organizations with religious objec-
tions to contraceptive coverage from hav-
ing to contract, arrange, pay, or refer for
such coverage (as detailed herein).
2. Anticipated Effects
The Departments expect that these fi-
nal regulations will not result in any addi-
tional significant burden on or costs to the
affected entities.
B. Special Analyses — Department of the
Treasury
For purposes of the Department of the
Treasury, it has been determined that this
Treasury decision is not a significant reg-
ulatory action as defined in Executive Or-
der 12866, as amended by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It has also been de-
termined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to this final regulation.
It is hereby certified that the collections
of information contained in this final reg-
ulation do not have a significant impact
on a substantial number of small entities.
Accordingly, a regulatory flexibility anal-
ysis under the Regulatory Flexibility Act
(5 U.S.C. chapter 6) is not required.
These final regulations require each or-
ganization seeking to be treated as an el-
igible organization under the final regula-
tions to self-certify that it meets the defi-
nition of eligible organization in the final
regulations. The self-certification must be
executed by an authorized representative
of the organization. The organization must
maintain the self-certification in its records
in a manner consistent with ERISA section
50
SeeGuidance on the TemporaryEnforcement Safe Harbor for Certain Employers, Group HealthPlans, and Group Health Insurance Issuers with Respect to the Requirement to Cover
Contraceptive Services Without Cost Sharing Under Section 2713 of the Public Health Service Act, Section 715(a)(1) of the Employee Retirement Income Security Act, and Section 9815(a)(1)
of the Internal Revenue Code, issued on February 10, 2012, and reissued on August 15, 2012.
July 29, 20131072013–31 I.R.B.

107 and make it available for examination
upon request. The final regulations also di-
rect each eligible organization to provide a
copy of its self-certification to the group
health insurance issuer or third party ad-
ministrator (as applicable) to avail itself of
an accommodation. The Departments are
unable to estimate the number of organi-
zations that will seek to be treated as eligi-
ble organizations. Of the eligible organiza-
tions, some will likely be small entities. It
is estimated that each eligible organization
will need only approximately 50 minutes
of labor to prepare and provide the infor-
mation in the self-certification. This will
not be a significant economic impact. For
these reasons, this information collection
requirement will not have a significant im-
pact on a substantialnumber of small enti-
ties.
These final regulations also require
health insurance issuers providing pay-
ments for contraceptive services, or third
party administrators arranging or provid-
ing such payments (or their agents), to
provide written notice to plan participants
and beneficiaries regarding the availability
of such payments. The notice will be pro-
vided contemporaneous with (to the extent
possible) but separate from any application
materials distributed in connection with
enrollment (or re-enrollment) in health
coverage established, maintained, or ar-
ranged by the eligible organization in any
plan year to which the accommodation
is to apply. The final regulations contain
model language for issuers and third party
administrators to use to satisfy the notice
requirement. It is unknown how many
issuers provide health insurance cover-
age in connection with insured plans of
eligible organizations or how many third
party administrators provide plan services
to self-insured plans of eligible organiza-
tions. However, the cost of preparation
and distribution of the notices will not be
significant. It is estimated that each is-
suer or third party administrator will need
approximately 1 hour ofclerical labor
(at $31.64 per hour) and 15 minutes of
management review (at $55.22 per hour)
to prepare the notices for a total cost of
approximately $44. It is estimated that
each notice will require $0.46 in postage
and $0.05 in materials cost (paper and ink)
and the total postage and materials cost for
each notice sent via mail will be $0.51. For
these reasons, these information collection
requirements will not have a significant
impact on a substantial number of small
entities.
Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking preced-
ing this final regulation was submitted to
the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small businesses.
C. Paperwork Reduction Act —
Department of Health and Human
Services
These final regulations contain infor-
mation collection requirements (ICRs) that
are subject to review by the Office of Man-
agement and Budget (OMB). A descrip-
tion of these provisions is given in the fol-
lowing paragraphs with an estimate of the
annual burden. Average labor costs (in-
cluding fringe benefits) used to estimate
the costs are calculated using data avail-
able from the Bureau of Labor Statistics.
HHS sought comments in the proposed
regulations, but did not receive any in-
formation that would allow for an esti-
mate of the number of organizations that
would seek to be treated as eligible or-
ganizations, or an estimate of the num-
ber of health insurance issuers that would
provide separate payments for contracep-
tive services. HHS is, nevertheless, seek-
ing OMB approval for the following ICRs
consistent with the Paperwork Reduction
Act of 1995. The burden estimates will be
updated in the future when more informa-
tion is available.
1. Self-Certification (§§147.131(b)(4) and
147.131(c)(1))
Each organization seeking to be treated
as an eligible organization under the fi-
nal regulations must self-certify that it
meets the definition of an eligible organ-
ization. The self-certification must be
executed by an authorized representative
of the organization. The self-certifi-
cation will not be submitted to any of
the Departments. The form that will be
used by organizations for their self-cer-
tification was made available during
the comment period for the proposed
regulations athttp://www.cms.gov/Reg-
ulations-and-Guidance/Legislation/Pa-
perworkReductionActof1995/PRA-List-
ing.html. HHS is finalizing this form
with updated instructions and notes, and
eliminating the proposed field for listing
the contraceptive services for which the
organization will notestablish, maintain,
administer, or fund coverage. The organi-
zation must maintain the self-certification
in its records in a manner consistent with
ERISA section 107 and make it available
for examination upon request. The eligi-
ble organization must provide a copy of
its self-certification to a health insurance
issuer for insured group health plans or
student health insurance coverage.
HHS is unable to estimate the number
of organizations that will seek to be treated
as eligible organizations under the final
regulations. Therefore, the burden for only
one eligible organization, as opposed to
all eligible organizations in total, is esti-
mated. It is assumed that, for each eligi-
ble organization, clerical staff will gather
and enter the necessary information, send
the self-certification electronically to the
issuer, and retain a copy for record-keep-
ing; a manager and legal counsel will re-
view it; and a senior executive will execute
it. HHS estimates that an organization will
need approximately 50 minutes (30 min-
utes of clerical labor at a cost of $30.64
per hour, 10 minutes for a manager at a
cost of $55.22 per hour, 5 minutes for legal
counsel at a cost of $83.10 per hour, and 5
minutes for a senior executive at a cost of
$112.43 per hour) to execute the self-cer-
tification. The certification may be elec-
tronically transmitted to the issuer at min-
imal cost. Therefore, the total annual bur-
den for preparing and providing the infor-
mation in the self-certification is estimated
to be approximately$41 for each eligible
organization.
2. Notice of Availability of Separate
Payments for Contraceptive Services
(§147.131(d))
The proposed regulations sought com-
ment on a notice of availability of contra-
ceptive coverage. The final regulations
instead direct a health insurance issuer
providing paymentsfor contraceptive
services for participants and beneficia-
ries in insured plans (or student enrollees
and covered dependents in student health
insurance coverage) of eligible organiza-
tions to provide a written notice to such
plan participants and beneficiaries (or such
student enrollees and covered dependents)
informing them of theavailability of such
2013–31 I.R.B.108July 29, 2013

payments. The notice must be provided
contemporaneous with (to the extent pos-
sible) but separate from any application
materials distributed in connection with
enrollment (or re-enrollment) in group
health coverage that is effective on the
first day of each applicable plan year, and
must specify that contraceptive coverage
will not be funded or administered by the
eligible organization but that the issuer
provides separate payments for contracep-
tive services. The notice must also provide
contact information for the issuer for ques-
tions and complaints. To satisfy the notice
requirement, issuers may use the model
language set forth in the final regulations
or substantially similar language.
It is unknown how many issuers pro-
vide health insurance coverage in connec-
tion with insured plans of eligible organi-
zations. In the proposed regulations, HHS
estimated that each issuer would need ap-
proximately 1 hour of clerical labor (at
$31.64 per hour) and 15 minutes of man-
agement review (at $55.22 per hour) to
prepare the notices for a total cost of ap-
proximately $44. It was estimated that
each notice would require $0.46 in postage
and $0.05 in materials cost (paper and ink)
and the total postage and materials cost
for each notice sent via mail would be
$0.51. One commenter stated that the cost
of preparing and sending these notices may
be greater than estimated, but did not pro-
vide an estimate. HHS believes that using
the model language provided in the final
regulations will help minimize costs and
declines to revise the estimate.
3. Collections for FFE User Fee
Adjustment (§156.50(d))
The final HHS regulation describes
information collections with respect to the
FFE user fee adjustment under §156.50(d).
The information collection instruments
are under development, and HHS will
seek public comments and OMB approval
on the instruments at a later date, consis-
tent with the Paperwork Reduction Act of
1995.
4. Collections for Self-Insured Group
Health Plans Without Third Party
Administrators
The final regulations provide that a self-
insured group health plan established or
maintained by an eligible organization that
does not use the services of a third party
administrator will be provided a safe har-
bor from enforcement of the contracep-
tive coverage requirement by the Depart-
ments contingent on, among other things:
(1) the plan providing certain information
to HHS; and (2) the plan providing partic-
ipants and beneficiaries with notice that it
does not provide benefits for contraceptive
services. As noted earlier in these final
regulations, the Departments believe that
there are no self-insured group health plans
in this circumstance. Therefore, because
the number of respondents is likely to be
fewer than 10, HHS is not seeking OMB
approval for this collection.
D. Paperwork Reduction Act —
Department of Labor and Department of
the Treasury
As noted previously, as under the pro-
posed regulations, eachorganization seek-
ing to be treated as an eligible organization
under the final regulations must self-cer-
tify that it meets the definition of an eligi-
ble organization. This requirement is set
out at 26 CFR 54.9815–2713A(a)(4) and
29 CFR 2590.715–2713A(a)(4) of the fi-
nal regulations of the Departments of La-
bor and the Treasury.
In addition, the final regulations in-
clude a notice of availability of separate
payments for contraceptive services. This
notice requirement is identical to that set
forth in 45 CFR 147.131(d), but it applies
to third party administrators in connec-
tion with disclosures to participants and
beneficiaries in self-insured group health
plans of eligible organizations, instead
of applying to health insurance issuers in
connection with disclosures to participants
and beneficiaries in insured group health
plans of eligible organizations. Therefore,
we are seeking OMB approval for this no-
tice, relying on the same estimates noted
previously.
V. Unfunded Mandates Reform Act
For purposes of the Unfunded Man-
dates Reform Act of 1995 (Pub. L. 104–4),
as well as Executive Order 12875, these
final regulations do not include any fed-
eral mandate that may result in expendi-
tures by state, local, or tribal governments,
nor do they include any federal mandates
that may impose an annual burden of $100
million, adjusted for inflation, or more on
the private sector.
51
VI. Federalism — Department of
Health and Human Services and
Department of Labor
Executive Order 13132 outlines fun-
damental principles of federalism, and
requires the adherence to specific crite-
ria by federal agencies in the process of
their formulation and implementation of
policies that have “substantial direct ef-
fects” on states, the relationship between
the federal government and states, or the
distribution of power and responsibilities
among the various levels of government.
Federal agencies promulgating regulations
that have these federalism implications
must consult with state and local officials,
and describe the extent of their consulta-
tion and the nature of the concerns of state
and local officials in the preamble to the
regulation.
In the Departments’ view, these final
regulations have federalism implications,
but the federal implications are substan-
tially mitigated because, with respect to
health insurance issuers, 15 states have en-
acted specific laws, regulations, or bul-
letins that meet or exceed the federal stan-
dards requiring coverage of specified pre-
ventive services without cost sharing. The
remaining states, which provide oversight
for these federal law requirements, do so
using their general authority to enforce
these federal standards. Therefore, the fi-
nal regulations are not likely to require
substantial additional oversight of states
by HHS.
In general, section 514 of ERISA pro-
vides that state laws are superseded to
the extent that they relate to any covered
employee benefit plan, and preserves state
laws that regulate insurance, banking, or
securities. ERISA also prohibits states
from regulating a covered plan as an insur-
51
In 2013, that threshold level is approximately $141 million.
July 29, 20131092013–31 I.R.B.

ance or investment company or bank. The
Health Insurance Portability and Account-
ability Act of 1996 (HIPAA) added a new
preemption provision to ERISA (as well
as to the PHS Act) narrowly preempting
state requirements ongroup health insur-
ance coverage. States may continue to
apply state law requirements but not to the
extent that such requirements prevent the
application of the federal requirement that
group health insurance coverage provided
in connection with group health plans
provide coverage forspecified preventive
services without cost sharing. HIPAA’s
Conference Report states that the confer-
ees intended the narrowest preemption of
state laws with regard to health insurance
issuers (H.R. Conf. Rep. No. 104–736,
104
th
Cong. 2d Session 205, 1996). State
insurance laws that are more stringent than
the federal requirement are unlikely to
“prevent the application of” the preventive
services coverage provision, and therefore
are unlikely to be preempted. Accord-
ingly, states have significant latitude to
impose requirements on health insurance
issuers that are more restrictive than those
in federal law.
Guidance conveying this interpretation
was published in theFederal Registeron
April 8, 1997 (62 FR 16904) and Decem-
ber 30, 2004 (69 FR 78720), and these final
regulations implement the preventive ser-
vices coverage provision’s minimum stan-
dards and do not significantly reduce the
discretion given to states under the statu-
tory scheme.
The PHS Act provides that states may
enforce the provisions of title XXVII of
the PHS Act as they pertain to issuers, but
that the Secretary of HHS will enforce any
provisions that a state does not have au-
thority to enforce or that a state has failed
to substantially enforce. When exercising
its responsibility to enforce provisions of
the PHS Act, HHS works cooperatively
with the state to address the state’s con-
cerns and avoid conflicts with the state’s
exercise of its authority.
52
HHS has de-
veloped procedures to implement its en-
forcement responsibilities, and to afford
states the maximum opportunity to enforce
the PHS Act’s requirements in the first in-
stance. In compliance with Executive Or-
der 13132’s requirement that agencies ex-
amine closely any policies that may have
federalism implications or limit the poli-
cymaking discretion of states, the Depart-
ments have engaged in numerous efforts
to consult and work cooperatively with af-
fected state and local officials.
In conclusion, throughout the process
of developing these final regulations, to the
extent feasible within the specific preemp-
tion provisions of ERISA and the PHS Act,
the Departments have attempted to balance
states’ interests in regulating health cover-
age and health insurance issuers, and the
rights of those individuals whom Congress
intended to protect in the PHS Act, ERISA,
and the Code.
VII. Statutory Authority
The Department of the Treasury regula-
tions are adopted pursuant to the authority
contained in sections 7805 and 9833 of the
Code.
The Department of Labor regulations
are adopted pursuant to the authority con-
tained in 29 U.S.C. 1002(16), 1027, 1059,
1135, 1161–1168, 1169, 1181–1183, 1181
note, 1185, 1185a, 1185b, 1185d, 1191,
1191a, 1191b, and 1191c; sec. 101(g),
Public Law 104–191, 110 Stat. 1936; sec.
401(b), Public Law 105–200, 112 Stat.
645 (42 U.S.C. 651 note); sec. 512(d),
Public Law 110–343, 122 Stat. 3881;
sec. 1001, 1201, and 1562(e), Public Law
111–148, 124 Stat. 119, as amended by
Public Law 111–152, 124 Stat. 1029; Sec-
retary of Labor’s Order 3–2010, 75 FR
55354 (September 10, 2010).
The Department of Health and Human
Services regulations are adopted pursuant
to the authority contained in sections 2701
through 2763, 2791, and 2792 of the PHS
Act (42 U.S.C. 300gg through 300gg–63,
300gg–91, and 300gg–92), as amended;
and Title I of the Affordable Care Act, sec-
tions 1301–1304, 1311–1312, 1321–1322,
1324, 1334, 1342–1343, 1401–1402, and
1412, Pub. L. 111–148, 124 Stat. 119
(42 U.S.C. 18021–18024, 18031–18032,
18041–18042, 18044, 18054, 18061,
18063, 18071, 18082, 26 U.S.C. 36B, and
31 U.S.C. 9701).
*****
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Accordingly, 26 CFR part 54 is
amended as follows:
PART 54—PENSION EXCISE TAXES
Paragraph 1.The authority citation
for part 54 continues to read, in part, as
follows:
Authority:26 U.S.C. 7805. * * *
Par. 2.Section 54.9815–2713 is
amended by revising paragraphs (a)(1)
introductory text and (a)(1)(iv) to read as
follows:
§54.9815–2713 Coverage of preventive
health services.
(a)***
(1)In general. Beginning at the time
described in paragraph (b) of this section
and subject to §54.9815–2713A, a group
health plan, or a health insurance issuer
offering group health insurance cover-
age, must provide coverage for all of the
following items and services, and may
not impose any cost-sharing requirements
(such as a copayment, coinsurance, or a
deductible) with respect to those items and
services:
*****
(iv) With respect to women, to the ex-
tent not described in paragraph (a)(1)(i)
of this section, evidence-informed preven-
tive care and screenings provided for in
binding comprehensive health plan cov-
erage guidelines supported by the Health
Resources and ServicesAdministration, in
accordance with 45 CFR 147.131(a).
*****
Par. 3.Section 54.9815–2713A is
added to read as follows:
§54.9815–2713A Accommodations in
connection with coverage of preventive
health services.
(a)Eligible organizations.Aneligible
organization is an organization that satis-
fies all of the following requirements:
(1) The organization opposes providing
coverage for some or all of any contracep-
tive services required to be covered under
52
This authority applies to insurance issued with respect to group health plans generally, including plans covering employees of church organizations. Thus, this discussion of federalism
applies to all group health insurance coverage that is subject to the PHS Act, including those church plans that provide coverage through a health insurance issuer (but not to church plans that
do not provide coverage through a health insurance issuer).
2013–31 I.R.B.110July 29, 2013

§54.9815–2713(a)(1)(iv) on account of re-
ligious objections.
(2) The organization is organized and
operates as a nonprofit entity.
(3) The organization holds itself out as
a religious organization.
(4) The organization self-certifies, in a
form and manner specified by the Secre-
taries of Health and Human Services and
Labor, that it satisfies the criteria in para-
graphs (a)(1) through (3) of this section,
and makes such self-certification available
for examination upon request by the first
day of the first plan year to which the ac-
commodation in paragraph (b) or (c) of
this section applies. The self-certification
must be executed by a person authorized
to make the certificationonbehalfofthe
organization, and must be maintained in
a manner consistent with the record re-
tention requirements under section 107 of
ERISA.
(b)Contraceptive coverage—self-in-
sured group health plans—(1) A group
health plan established or maintained by
an eligible organization that provides ben-
efits on a self-insured basis complies for
one or more plan years with any require-
ment under §54.9815–2713(a)(1)(iv) to
provide contraceptive coverage if all of
the requirements of this paragraph (b)(1)
of this section are satisfied:
(i) The eligible organization or its plan
contracts with one or more third party ad-
ministrators.
(ii) The eligible organization provides
each third party administrator that will
process claims for any contraceptive
services required to be covered under
§54.9815–2713(a)(1)(iv) with a copy of
the self-certification described in para-
graph (a)(4) of this section, which shall
include notice that—
(A) The eligible organization will not
act as the plan administrator or claims ad-
ministrator with respect to claims for con-
traceptive services, orcontribute to the
funding of contraceptive services; and
(B) Obligations of the third party
administrator are set forth in 29 CFR
2510.3–16 and 26 CFR 54.9815–2713A.
(iii) The eligible organization must not,
directly or indirectly, seek to interfere with
a third party administrator’s arrangements
to provide or arrange separate payments
for contraceptive services for participants
or beneficiaries, and must not, directly or
indirectly, seek to influence the third party
administrator’s decision to make any such
arrangements.
(2) If a third party administrator re-
ceives a copy of the self-certification de-
scribed in paragraph (a)(4) of this section,
and agrees to enter into or remain in a con-
tractual relationship with the eligible or-
ganization or its plan to provide adminis-
trative services for the plan, the third party
administrator shall provide or arrange pay-
ments for contraceptive services using one
of the following methods—
(i) Provide payments for contraceptive
services for plan participants and bene-
ficiaries without imposing any cost-shar-
ing requirements (such as a copayment,
coinsurance, or a deductible), or imposing
a premium, fee, or other charge, or any
portion thereof, directly or indirectly, on
the eligible organization, the group health
plan, or plan participants or beneficiaries;
or
(ii) Arrange for an issuer or other entity
to provide payments for contraceptive ser-
vices for plan participants and beneficia-
ries without imposing any cost-sharing re-
quirements (such as a copayment, coinsur-
ance, or a deductible), or imposing a pre-
mium, fee, or other charge, or any portion
thereof, directly or indirectly, on the eligi-
ble organization, the group health plan, or
plan participants or beneficiaries.
(3)Ifathirdpartyadministrator pro-
vides or arranges payments for contra-
ceptive services in accordance with either
paragraph (b)(2)(i)or (ii) of this section,
the costs of providing or arranging such
payments may be reimbursed through an
adjustment to the Federally-facilitated Ex-
change user fee for a participating issuer
pursuant to 45 CFR 156.50(d).
(4) A third party administrator may not
require any documentation other than the
copy of the self-certification from the el-
igible organization regarding its status as
such.
(c)Contraceptive coverage—insured
group health plans—(1)General rule.A
group health plan established or main-
tained by an eligible organization that
provides benefits through one or more
group health insurance issuers complies
for one or more plan years with any re-
quirement under §54.9815–2713(a)(1)(iv)
to provide contraceptive coverage if the
eligible organization or group health plan
furnishes a copy of the self-certification
described in paragraph (a)(4) of this sec-
tion to each issuer that would otherwise
provide such coverage in connection with
the group health plan. An issuer may not
require any documentation other than the
copy of the self-certification from the el-
igible organization regarding its status as
such.
(2)Payments for contraceptive ser-
vices—(i) A group health insurance issuer
that receives a copy of the self-certi-
fication described in paragraph (a)(4)
of this section with respect to a group
health plan established or maintained by
an eligible organization in connection
with which the issuer would otherwise
provide contraceptive coverage under
§54.9815–2713(a)(1)(iv) must—
(A) Expressly exclude contraceptive
coverage from the group health insurance
coverage provided in connection with the
group health plan; and
(B) Provide separate payments for any
contraceptive services required to be cov-
ered under §54.9815–2713(a)(1)(iv) for
plan participants and beneficiaries for so
long as they remain enrolled in the plan.
(ii) With respect to payments for contra-
ceptive services, the issuer may not impose
any cost-sharing requirements (such as a
copayment, coinsurance, or a deductible),
or impose any premium, fee, or other
charge, or any portion thereof, directly or
indirectly, on the eligible organization, the
group health plan, or plan participants or
beneficiaries. The issuer must segregate
premium revenue collected from the eli-
gible organization from the monies used
to provide payments for contraceptive ser-
vices. The issuer must provide payments
for contraceptive services in a manner that
is consistent with the requirements under
sections 2706, 2709,2711, 2713, 2719,
and 2719A of the PHS Act, as incorpo-
rated into section 9815. If the group health
plan of the eligible organization provides
coverage for some but not all of any con-
traceptive services required to be covered
under §54.9815–2713(a)(1)(iv), the issuer
is required to provide payments only for
those contraceptive services for which the
group health plan does not provide cov-
erage. However, the issuer may provide
payments for all contraceptive services, at
the issuer’s option.
(d)Notice of availability of sepa-
rate payments for contraceptive ser-
vices—self-insured and insured group
health plans. For each plan year to which
July 29, 20131112013–31 I.R.B.

the accommodation in paragraph (b) or
(c) of this section is to apply, a third party
administrator required to provide or ar-
range payments for contraceptive services
pursuant to paragraph (b) of this section,
and an issuer required to provide pay-
ments for contraceptive services pursuant
to paragraph (c) of this section, must pro-
vide to plan participants and beneficiaries
written notice of the availability of sepa-
rate payments for contraceptive services
contemporaneous with (to the extent pos-
sible), but separate from, any application
materials distributed in connection with
enrollment (or re-enrollment) in group
health coverage that is effective beginning
on the first day of each applicable plan
year. The notice must specify that the
eligible organization does not administer
or fund contraceptive benefits, but that
the third party administrator or issuer, as
applicable, provides separate payments
for contraceptive services, and must pro-
vide contact information for questions and
complaints. The following model lan-
guage, or substantially similar language,
may be used to satisfy the notice require-
ment of this paragraph (d): “Your em-
ployer has certified that your group health
plan qualifies for anaccommodation with
respect to the federal requirement to cover
all Food and Drug Administration-ap-
proved contraceptive services for women,
as prescribed by a health care provider,
without cost sharing. This means that
your employer will not contract, arrange,
pay, or refer for contraceptive coverage.
Instead, [name of third party administra-
tor/health insurance issuer] will provide
or arrange separate payments for contra-
ceptive services thatyou use, without cost
sharing and at no other cost, for so long as
you are enrolled in your group health plan.
Your employer will not administer or fund
these payments. If you have any questions
about this notice, contact [contact infor-
mation for third party administrator/health
insurance issuer].”
(e)Reliance—insured group health
plans—(1) If an issuer relies reasonably
and in good faith on a representation by
the eligible organization as to its eligibility
for the accommodation in paragraph (c)
of this section, and the representation is
later determined to be incorrect, the issuer
is considered to comply with any require-
ment under §54.9815–2713(a)(1)(iv) to
provide contraceptive coverage if the is-
suer complies with theobligations under
this section applicable to such issuer.
(2) A group health plan is considered
to comply with any requirement under
§54.9815–2713(a)(1)(iv) to provide con-
traceptive coverage if the plan complies
with its obligations under paragraph (c) of
this section, without regard to whether the
issuer complies with the obligations under
this section applicable to such issuer.
Signed this 27
th
day of June 2013.
Beth Tucker,
Deputy Commissioner
for Operations Support
Internal Revenue Service.
Mark J. Mazur,
Assistant Secretary of the
Treasury (Tax Policy).
(Filed by the Office of the Federal Register on June 28, 2013,
11:15 a.m., and published in the issue of the Federal Register
for July 2, 2013, 78 F.R. 39870)
2013–31 I.R.B.112July 29, 2013

Part III. Administrative, Procedural, and Miscellaneous
Revised Timeline and Other
Guidance Regarding the
Implementation of FATCA
Notice 2013–43
I. PURPOSE
This notice provides: (i) revised time-
lines for implementation of the require-
ments of sections 1471 through 1474 of
the Internal Revenue Code (Code), com-
monlyreferredtoastheForeignAccount
Tax Compliance Act, or FATCA; and (ii)
additional guidance concerning the treat-
ment of financial institutions located in
jurisdictions that have signed intergovern-
mental agreements for the implementation
of FATCA (IGAs) but have not yet brought
those IGAs into force. The Department
of the Treasury (Treasury) and the In-
ternal Revenue Service (IRS) intend to
amend the regulations under sections 1471
through 1474 to adopt these rules. Prior
to the issuance of those amendments, tax-
payers may rely on the provisions of this
notice regarding expected amendments to
the regulations.
II. BACKGROUND
A. FATCA Regulations
On March 18, 2010, the Hiring Incen-
tives to Restore Employment Act of 2010,
Pub. L. 111–147 (H.R. 2847), added chap-
ter 4 (sections 1471 through 1474) to Sub-
title A of the Code. Chapter 4 requires
withholding agents to withhold 30 percent
of certain payments to a foreign financial
institution (FFI) unless the FFI has en-
tered into an agreement (FFI agreement)
with the IRS to, among other things, re-
port certain information with respect to
U.S. accounts. Chapter 4 also imposes
on withholding agents certain withhold-
ing, documentation, and reporting require-
ments with respect to certain payments
made to certain non-financial foreign en-
tities (NFFEs).
On February 15, 2012, Treasury and
the IRS published proposed regulations
under chapter 4 in theFederal Register
(REG–121647–10, 77 Fed. Reg. 9022)
(proposed regulations). On January 17,
2013, Treasury and the IRS published
final regulations under chapter 4 (TD
9610, 78 Fed. Reg. 5873) (final regula-
tions). The final regulations provided for
a phased implementation of the require-
ments of FATCA, beginning on January
1, 2014, and continuing through 2017.
In particular, the final regulations pro-
vided that withholding agents (including
participating FFIs (PFFIs), qualified inter-
mediaries (QIs) that assume withholding
responsibility, withholding foreign part-
nerships (WPs), and withholding foreign
trusts (WTs)) would be required to begin
withholding with respect to withholdable
payments made after December 31, 2013
(with an exception for “grandfathered
obligations” outstanding on January 1,
2014, and associatedcollateral). Due
diligence for documenting payees and ac-
count holders by U.S. withholding agents
and PFFIs would be phased in during 2014
and 2015. Annual reporting by PFFIs
would be phased in starting in 2015 (with
respect to information related to the 2013
and 2014 calendar years), with reporting
of the full scope of FATCA information
required beginning in 2017.
B. Model IGAs
On July 26, 2012, Treasury released a
model (Model 1) for bilateral agreements
with other jurisdictions (in both reciprocal
and nonreciprocal versions) under which
FFIs (reporting Model 1 FFIs) would
satisfy their chapter 4 requirements by re-
porting information about U.S. accounts to
their respective tax authorities, followed
by the automatic exchange of that infor-
mation on a government-to-government
basis with the United States. On Novem-
ber 14, 2012, Treasury released a second
model agreement (Model 2), under which
FFIs (reporting Model 2 FFIs) would re-
port specified information directly to the
IRS in a manner consistent with the final
regulations, supplemented by govern-
ment-to-government exchange of informa-
tion on request. Treasury has concluded
a number of bilateral IGAs based on the
model agreements (Model 1 IGAs and
Model 2 IGAs, respectively). Treasury has
periodically updated the model IGAs since
their initial release, including an update
to both model IGAs on May 9, 2013, to
incorporate certain modifications arrived
at through intergovernmental discussions,
as well as modifications to the due dili-
gence procedures to reflect improvements
adopted in the final regulations following
the initial release of the model IGAs.
The model IGAs outline time frames for
FFIs in jurisdictions with IGAs in force
(partner jurisdictions) to complete the nec-
essary due diligence to identify U.S. ac-
counts and to perform reporting on U.S.
accounts that are identified. The time-
lines and other provisions contained in the
model IGAs interact with the final regula-
tions in various ways. The model IGAs,
and all IGAs that have been concluded
to date, contain a provision, colloquially
referred to as the “most-favored nation”
provision, providing that, with respect to
certain terms of the IGA, including the
due diligence rules applicable to report-
ing Model 1 FFIs and reporting Model 2
FFIs, a partner jurisdiction is entitled to the
benefit of any more favorable provision
agreed to in a comparable IGA with an-
other partner jurisdiction, subject to certain
conditions. Model 1 IGAs and Model 2
IGAs also contain a coordination provision
providing that a partner jurisdiction may
permit its FFIs to use a definition in the rel-
evant U.S. Treasury Regulations in lieu of
a corresponding definition in the IGA, pro-
vided that such application would not frus-
trate the purposes of the IGA. With respect
to the due diligence procedures, Model 1
IGAs and Model 2 IGAs provide that a
partner jurisdiction may permit its FFIs
to apply the due diligence procedures de-
scribed in the relevant U.S. Treasury Reg-
ulations in lieu of the due diligence pro-
cedures in the IGA to establish the status
of account holders and payees. In addi-
tion, paragraph 6 of Article 4 of the Model
1 IGA coordinates the time by which the
parties must obtain and exchange informa-
tion with the time by which PFFIs must re-
port similar information to the IRS under
the relevant U.S. Treasury Regulations.
C. Registration Process
In the preamble to the final regulations,
Treasury and the IRS announced their in-
tent to create a FATCA registration web-
site, which would serve as the primary way
for FFIs to interact with the IRS to com-
plete the required registration, agreements,
July 29, 20131132013–31 I.R.B.

and certifications. The preamble stated
that the FATCA registration website would
be accessible to FFIs no later than July 15,
2013. After approvalof its registration,
each PFFI and registered deemed-compli-
ant FFI would be assigned a global in-
termediary identification number (GIIN),
which would be used both for reporting
purposes and to identify the FFI’s status
to withholding agents. The preamble pro-
vided that the IRS would electronically
post the first list of PFFIs and registered
deemed-compliant FFIs (IRS FFI List) on
December 2, 2013, and would update the
list on a monthly basis. To ensure inclu-
sion on the December 2013 IRS FFI List,
FFIs would need to register by October 25,
2013.
D. Modification of Phased Timeline for
Implementation
Comments have indicated that cer-
tain elements of the phased timeline for
the implementation of FATCA present
practical problems for both U.S. with-
holding agents and FFIs. In addition,
whilecommentsfromFFIsoverwhelm-
ingly supported the development of IGAs
as a solution to the legal conflicts that
might otherwise impede compliance with
FATCA and as a more effective and effi-
cient way to implement cross-border tax
information reporting, some comments
noted that, in the short term, continued
uncertainty about whether an IGA will be
in effect in a particular jurisdiction hinders
the ability of FFIs and withholding agents
to complete due diligence and other im-
plementation procedures. In consideration
of these comments, and to allow for a
more orderly implementation of FATCA,
Treasury and the IRS intend to amend
the final regulations to postpone by six
months the start of FATCA withholding,
and to make corresponding adjustments to
various other time frames provided in the
final regulations, as described in section
III below.
In addition, as described in section IV
below, Treasury and the IRS intend to
provide a list of jurisdictions that will be
treated as having in effect an IGA, even
though that IGA may not have entered into
force as of July 1, 2014.
Unless otherwise defined, terms used in
this notice have themeanings set forth in
the final regulations.
III. REVISED FATCA
IMPLEMENTATION TIMELINE
A. Timeline for Withholding
Withholding agents generally will be
requiredtobeginwithholdingonwith-
holdable payments made after June 30,
2014, to payees that are FFIs or NFFEs
with respect to obligations that are not
grandfathered obligations, unless the pay-
ments can be reliably associated with
documentation on which the withholding
agent can rely to treat the payments as
exempt from withholding. The definition
of grandfathered obligation will be revised
to include obligations outstanding on July
1, 2014 (and associatedcollateral). This
notice does not affect the timing provided
in the final regulations for withholding
on gross proceeds, passthru payments,
and payments of U.S. source FDAP with
respect to offshore obligations by persons
not acting in an intermediary capacity.
B. Timeline for Implementing New
Account Opening Procedures and the
Definition of Preexisting Obligations
Withholding agents generally will be
required to implement new account open-
ing procedures by July 1, 2014, or, in the
case of a PFFI, by the later of July 1,
2014 or the effective date of its FFI agree-
ment. Accordingly, the definition of the
term “preexisting obligation” will be mod-
ified to mean:
•With respect to a withholding agent
other than a PFFI or a registered
deemed-compliant FFI:any account,
instrument, or contract maintained, ex-
ecuted, or issued by the withholding
agent that is outstanding on June 30,
2014;
•With respect to a PFFI: any account,
instrument, or contract maintained, ex-
ecuted, or issued by the PFFI that is
outstanding on the effective date of the
FFI agreement; and
•With respect to a registered deemed-
compliant FFI:any account, instru-
ment, or contract maintained, executed
or issued by the FFI prior to the later
of July 1, 2014, or the date on which
the FFI registers as a deemed-compli-
ant FFI and receives a GIIN.
Treasury intends to include a similar
change to the definition of the term “Pre-
existing Account” in both model IGAs.
Thus, it is expected that future IGAs will
define the term “Preexisting Account” to
mean a Financial Account maintained as
of June 30, 2014. For IGAs in force that
contain the previous definition of the term
“Preexisting Account,” the partner juris-
diction will be permitted under the coor-
dination provision of the IGA to permit its
FFIs to substitute the definition of the term
“preexisting account” from the amended
final regulations for the definition of the
term “Preexisting Account” in the IGA.
For IGAs concluded before the coordina-
tion provision was added, the coordination
provision will apply through the operation
of the most-favored nation provision once
an IGA containing the coordination provi-
sion is in force.
C. Transition Rules for Completing Due
Diligence on Preexisting Obligations
The FFI Agreement of a PFFI that reg-
isters and receives a GIIN from the IRS on
or before June 30, 2014, will have an ef-
fective date of June 30, 2014, effectively
resulting in a six-month postponement of
the deadlines for completing due diligence
on preexisting obligations. For withhold-
ing agents other than PFFIs, the deadlines
for completing due diligence on preexist-
ing obligations will be postponed by six
months. Thus, for example, a withholding
agent other than a PFFI will be required to
document payees that are prima facie FFIs
by December 31, 2014, instead of by June
30, 2014.
Account balance or value will be mea-
sured initially as of June 30, 2014, for
purposes of determining whether an ac-
count is exempt from review, subject only
to an electronic search for indicia, or
subject to enhanced review. An account
with a balance or value that was initially
$1,000,000 or below, and with respect to
which there has been no change in circum-
stances, will not be subject to enhanced
review unless the account balance or value
exceeds $1,000,000 as of the end of 2015
or any subsequent calendar year. Thus, the
obligation to monitor the account balance
or value of preexisting accounts to deter-
mine whether enhanced review is required
is deferred by one year.
2013–31 I.R.B.114July 29, 2013

Treasury intends to provide for a sim-
ilar six-month delay in the due diligence
procedures included in Annex I of IGAs
concluded after the issuance of this notice,
which will generally apply automatically
to previously-signed IGAs through the op-
eration of the most-favored nation provi-
sion in those IGAs once those later signed
agreements are in force.
D. Due Date for First Report of a PFFI
with respect to U.S. Accounts
The final regulations provide that a
PFFI will be required to file information
reports on its U.S. accounts with respect
to the 2013 and 2014 calendar years no
later than March 31, 2015. Treasury and
the IRS intend to modify these rules to
require reporting on March 31, 2015, only
with respect to the 2014 calendar year
(for U.S. accounts identified by Decem-
ber 31, 2014). Through the operation of
paragraph 6 of Article 4 of the Model 1
IGAs, this modification to the required
reporting will apply automatically in the
context of Model 1 IGAs as well. For
IGAs concluded before paragraph 6 of Ar-
ticle 4 was added, the rules of paragraph 6
of Article 4 will apply through the opera-
tion of the most-favored nation provision
once an IGA containing paragraph 6 of
Article 4 is in force. As a result, once an
IGA containing paragraph 6 of Article 4
is in force, partner jurisdictions will not
be obligated to obtain and exchange infor-
mation with respect to the 2013 calendar
year. Instead, the information exchanged
by partner jurisdictions in 2015 will be re-
quired to include only information related
to the 2014 calendar year.
E. Timeline for Registration
The FATCA registration website is pro-
jected to be accessible to financial institu-
tions on August 19, 2013. Other key dates
for registration, however, will be extended
by six months. Thus, after the FATCA reg-
istration website opens, a financial insti-
tution will be able to begin the process of
registering by creating an account and in-
putting the required information for itself,
for its branch operations, and, if it serves
as a “lead” financial institution, for other
members of its expanded affiliated group.
All input information will be saved auto-
matically in the registration system and as-
sociated with the financial institution’s ac-
count. For the period from the opening
of the FATCA registration website through
December 31, 2013, a financial institution
will be able to access its account to mod-
ify or add registration information, includ-
ing to indicate the appropriate registration
status, as such status is established, for ex-
ample, by the signing of an IGA. Prior to
January 1, 2014, however, any information
entered into the system, even if submitted
as final, will not be regarded as a final sub-
mission, but will merely be stored until the
information is submitted as final on or af-
ter January 1, 2014. Thus, financial insti-
tutions can use the remainder of 2013 to
get familiar with the registration process,
to input preliminary information, and to re-
fine that information. On or after January
1, 2014, each financial institution will be
expected to finalize its registration infor-
mation by logging into its account on the
FATCA registration website, making any
necessary additional changes, and submit-
ting the information as final.
Consistent with this 6-month extension,
the IRS will not issue any GIINs in 2013.
Instead it expects to begin issuing GIINs
as registrations are finalized in 2014. The
IRS will electronically post the first IRS
FFI List by June 2, 2014, and will update
the list on a monthly basis thereafter. To
ensure inclusion in the June 2014 IRS FFI
List, FFIs would need to finalize their reg-
istration by April 25, 2014.
As provided in the final regulations,
subject to certain exceptions for preex-
isting obligations and for offshore obli-
gations, a withholding agent generally
may treat a payee as a PFFI or registered
deemed-compliant FFI only if the with-
holding agent has a withholding certificate
identifying the payee as a PFFI or regis-
tered deemed-compliant FFI and verifies
the GIIN contained on that withholding
certificate against the IRS FFI List. For
payments made prior to January 1, 2015,
however, verification of a GIIN is not
required with respect to payees that are re-
porting Model 1 FFIs. This provision will
continue to apply following the changes
described in this notice. As a result, while
reporting Model 1 FFIs will be able to
register and obtain GIINs beginning on
January 1, 2014, they will have additional
time beyond July 1, 2014, to register and
obtain a GIIN in order to ensure that they
are included on the IRS FFI list before
January 1, 2015.
F. Treatment of Expiring Chapter 3
Documentation
For purposes of chapter 3 withholding,
withholding certificates and documentary
evidence generally expire on the last day
of the third calendar year following the
year in which the withholding certificate
is signed or the documentary evidence is
provided to the withholding agent. With-
holding certificates and documentary evi-
dence that would otherwise expire on De-
cember 31, 2013, will expire instead on
June 30, 2014, unless a change in circum-
stances occurs that would otherwise render
the withholding certificate or documentary
evidence incorrect or unreliable.
G. Automatic Extension of Expiring QI,
WP, and WT Agreements
All QI, WP, or WT agreements that
would otherwise expire on December 31,
2013, will be automatically extended until
June 30, 2014.
H. Extension of Foreign-Targeted
Registered Obligation Rules
Notice 2012–20 provided as a limited
transition rule that a withholding agent
paying interest on an obligation issued in
registered form after March 18, 2012, and
before January 1, 2014, may apply the for-
eign-targeted registered obligation rules
of § 1.871–14(e) if the obligation satisfies
the requirements of those rules. The end
of this transition period was intended to
coincide with the implementation of the
chapter 4 rules. As a result, this transition
rule will be extended to obligations issued
in registered form after March 18, 2012
and before July 1, 2014.
IV. Treatment of Financial Institutions
Operating in Jurisdictions That
Have Signed an Intergovernmental
Agreement to Implement FATCA
A jurisdiction will be treated as having
in effect an IGA if the jurisdiction is listed
on the Treasury website as a jurisdiction
that is treated as having an IGA in effect.
In general, Treasury and the IRS intend to
include on this list jurisdictions that have
signed but have not yet brought into force
July 29, 20131152013–31 I.R.B.

an IGA. The list of jurisdictions that are
treated as having an IGA in effect is avail-
able at the following address:
http://www.treasury.gov/resource-cen-
ter/tax-policy/treaties/Pages/FATCA-
Archive.aspx.
A financial institution resident in a ju-
risdiction that is treated as having an IGA
in effect will be permitted to register on the
FATCA registration website as a registered
deemed-compliant FFI (which would in-
clude all reporting Model 1 FFIs) or PFFI
(which would include all reporting Model
2 FFIs), as applicable. In addition, a finan-
cial institution may designate a branch lo-
cated in such jurisdiction as not a limited
branch. A jurisdiction may be removed
from the list of jurisdictions that are treated
as having an IGA in effect if the jurisdic-
tion fails to perform the steps necessary to
bring the IGA into force within a reason-
able period of time. If a jurisdiction is re-
moved from the list, financial institutions
that are residents of that jurisdiction, and
branches that are located in that jurisdic-
tion, will no longer be entitled to the status
that would be provided under the IGA, and
must update their status on the FATCA reg-
istration website accordingly.
DRAFTING INFORMATION
The principal author of this notice is
Tara Ferris of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
John Sweeney at (202) 622–3840 (not a
toll-free call).
Transition Relief for
2014 Under §§ 6055
(§ 6055 Information
Reporting), 6056 (§ 6056
Information Reporting) and
4980H (Employer Shared
Responsibility Provisions)
Notice 2013–45
I. PURPOSE AND OVERVIEW
This notice provides transition relief
for 2014 from (1) the information report-
ing requirements applicable to insurers,
self-insuring employers, and certain other
providers of minimum essential coverage
under § 6055 of the Internal Revenue Code
(Code) (§ 6055 Information Reporting),
(2) the information reporting requirements
applicable to applicable large employ-
ers under § 6056 (§ 6056 Information
Reporting), and (3) the employer shared
responsibility provisions under § 4980H
(Employer Shared Responsibility Provi-
sions). This transition relief will provide
additional time for input from employers
and other reporting entities in an effort to
simplify information reporting consistent
with effective implementation of the law.
This transition relief also is intended to
provide employers, insurers, and other
providers of minimum essential cover-
age time to adapt their health coverage
and reporting systems. Both the informa-
tion reporting and the Employer Shared
Responsibility Provisions will be fully
effective for 2015. In preparation for that,
once the information reporting rules have
been issued, employers and other report-
ing entities are encouraged to voluntarily
comply with the information reporting
provisions for 2014. This transition relief
through 2014 for the information report-
ing and Employer Shared Responsibility
Provisions has no effect on the effective
date or application of other Affordable
Care Act provisions.
II. BACKGROUND
Sections 6055, 6056, and 4980H were
added to the Code by §§ 1502, 1514, and
1513, respectively, of the Patient Pro-
tection and Affordable Care Act (ACA),
enacted March 23, 2010, Pub. L. No.
111–148.
1
Section 6055 requires annual
information reporting by health insurance
issuers, self-insuring employers, gov-
ernment agencies, and other providers
of health coverage. Section 6056 re-
quires annual information reporting by
applicable large employers relating to the
health insurance that the employer offers
(or does not offer) to its full-time em-
ployees. Section 4980H(a) imposes an
assessable payment on an applicable large
employer that fails to offer minimum es-
sential coverage to its full-time employees
(and their dependents) under an eligible
employer-sponsored plan if at least one
full-time employee enrolls in a qualified
health plan for which a premium tax credit
is allowed or paid. Section 4980H(b)
imposes an assessable payment on an
applicable large employer that offers min-
imum essential coverage to its full-time
employees (and their dependents) under
an eligible employer-sponsored plan but
has one or more full-time employees who
enroll in a qualified health plan for which
a premium tax credit is allowed or paid
(for example, if the coverage offered ei-
ther does not provide minimum value or is
not affordable to that full-time employee).
III. TRANSITION RELIEF
Q–1.When will the rules be published
regarding § 6055 Information Reporting
and § 6056 Information Reporting? How
will these provisions apply for 2014?
A–1.TheAffordableCareActrequires
information reporting under § 6055 by in-
surers, self-insuring employers, govern-
ment agencies, and certain other parties
that provide health coverage and requires
information reporting under § 6056 by ap-
plicable large employers with respect to
the health coverage offered to their full-
time employees. Proposed rules for the
information reporting provisions are ex-
pected to be published this summer. The
proposed rules will reflect the fact that
transition relief will be provided for infor-
mation reporting under §§ 6055 and 6056
for 2014. This transition relief will provide
additional time for dialogue with stake-
holders in an effort to simplify the report-
ing requirements consistent with effective
implementation of the law. It will also
provide employers, insurers, and other re-
porting entities additional time to develop
their systems for assembling and report-
ing the needed data. Employers, insurers,
and other reporting entities are encouraged
to voluntarily comply with these informa-
tion reporting provisions for 2014 (once
the information reporting rules have been
issued) in preparationfor the full applica-
tion of the provisions for 2015. However,
information reporting under §§ 6055 and
1
Section 4980H was amended by § 1003 of the Health Care and Education Reconciliation Act of 2010 (HCERA) (enacted March 30, 2010, Pub. L. No. 111–152) andwas further amended
by § 1858(b)(4) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (enacted April 15, 2011, Pub. L. No. 112–10). Section 6056 was amended by §§ 10106(g)
and 10108(j) of the ACA and was further amended by § 1858(b)(5) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011. In thisnotice, the term Affordable Care
Act refers to the ACA and HCERA, collectively.
2013–31 I.R.B.116July 29, 2013

6056 will be optional for 2014; accord-
ingly, no penalties will be applied for fail-
uretocomplywiththeseinformationre-
porting provisions for 2014.
Q–2.What does the 2014 transition
relief for § 6056 Information Reporting
mean for application of the Employer
Shared Responsibility Provisions for
2014?
A–2.Under the Employer Shared Re-
sponsibility Provisions, an applicable large
employer generally must offer affordable,
minimum value health coverage to its full-
time employees or a shared responsibil-
ity payment may apply if one or more of
its full-time employees receive a premium
tax credit under § 36B. The § 6056 In-
formation Reporting is integral to the ad-
ministration of the Employer Shared Re-
sponsibility Provisions. In particular, be-
cause an employer typically will not know
whether a full-time employee received a
premium tax credit, the employer will not
have all of the information needed to de-
termine whether itowes a payment under
§ 4980H. Accordingly, the employer is not
required to calculate a payment with re-
spect to § 4980H or file returns submit-
ting such a payment. Instead, after receiv-
ing the information returns filed by appli-
cable large employers under § 6056 and
the information about employees claiming
the premium tax credit for any given cal-
endar year, the Internal Revenue Service
(IRS) will determine whether any of the
employer’s full-timeemployees received
the premium tax credit and, if so, whether
an assessable payment under § 4980H may
be due. If the IRS concludes that an em-
ployer may owe such an assessable pay-
ment, it will contact the employer, and the
employer will have an opportunity to re-
spond to the information the IRS provides
before a payment is assessed.
For this reason, the transition relief
from § 6056 Information Reporting for
2014 is expected to make it impractical to
determine which employers owe shared
responsibility payments for 2014 under
the Employer Shared Responsibility Pro-
visions. Accordingly, no employer shared
responsibility payments will be assessed
for 2014. However, in preparation for the
application of the Employer Shared Re-
sponsibility Provisions beginning in 2015,
employers and other affected entities are
encouraged to voluntarily comply for 2014
with the information reporting provisions
(once the information reporting rules have
been issued) and to maintain or expand
health coverage in 2014. Real-world test-
ing of reporting systems and plan designs
through voluntary compliance for 2014
will contribute to a smoother transition to
full implementation for 2015.
Q–3.Does this affect employees’ ac-
cess to the premium tax credit?
A–3.No. Individuals will continue to
be eligible for the premium tax credit by
enrollinginaqualifiedhealth plan through
the Affordable Insurance Exchanges (also
called Health Insurance Marketplaces) if
their household income is within a spec-
ified range and they are not eligible for
other minimum essential coverage, includ-
ing an eligible employer-sponsored plan
that is affordable and provides minimum
value.
Q–4.What does this mean for other
provisions in the Affordable Care Act?
A–4. This transition relief through
2014 for § 6055 Information Reporting,
§ 6056 Information Reporting, and the
Employer Shared Responsibility Provi-
sions has no effect on the effective date or
application of otherAffordable Care Act
provisions, such as the premium tax credit
under § 36B and the individual shared
responsibility provisions under § 5000A.
IV. DRAFTING INFORMATION
The principal author of this notice
is Kathryn Johnson of the Office of
Associate Chief Counsel (Tax Exempt
& Government Entities). For further
information regarding this notice contact
Kathryn Johnson at (202) 927–9639 (not a
toll-free call).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2013–46
This notice provides guidance on the
corporate bond monthly yield curve (and
the corresponding spot segment rates), and
the 24-month average segment rates under
§ 430(h)(2) of the Internal Revenue Code.
In addition, this notice provides guidance
as to the interest rate on 30-year Trea-
sury securities under § 417(e)(3)(A)(ii)(II)
as in effect for plan years beginning be-
fore 2008, the 30-year Treasury weighted
average rate under § 431(c)(6)(E)(ii)(I),
and the minimum present value segment
rates under § 417(e)(3)(D) as in effect for
plan years beginning after 2007. These
rates reflect certain changes implemented
by the Moving Ahead for Progress in the
21st Century Act, Public Law 112–141
(MAP–21). MAP–21 provides that for
purposes of § 430(h)(2), the segment rates
are limited by the applicable maximum
percentage or the applicable minimum per-
centage based on the average of segment
rates over a 25 year period.
YIELD CURVE AND SEGMENT
RATES
Generally, except for certain plans
under sections 104 and 105 of the Pen-
sion Protection Act of 2006, § 430 of
the Code specifies the minimum funding
requirements that apply to single em-
ployer plans pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates are
adjusted by the applicable percentage of
the 25-year average segment rates for the
period ending September 30 of the year
preceding the calendar year in which the
plan year begins. However, an election
may be made under § 430(h)(2)(D)(ii) to
use the monthly yield curve in place of the
segment rates.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Pursuant
to Notice 2007–81, the monthly corpo-
rate bond yield curve derived from June
2013 data is in Table I at the end of this
notice. The spot first, second, and third
segment rates for the month of June 2013
are, respectively, 1.24, 4.25, and 5.43. For
plan years beginning on or after January 1,
2012, the 24-month average segment rates
determined under § 430(h)(2)(C)(iv) must
be adjusted by the applicable percentage
July 29, 20131172013–31 I.R.B.

of the corresponding 25-year average seg-
ment rates. The 25-year average segment
rates for plan years beginning in 2012 and
for plan years beginning in 2013 were pub-
lished in Notices 2012–55 and 2013–11,
respectively. The three 24-month average
corporate bond segment rates applicable
for July 2013 without adjustment, and the
adjusted 24-month average segment rates
taking into account the applicable percent-
ages of the corresponding 25-year average
segment rates, are as follows:
24-Month Average Segment Rates
Not Adjusted
Adjusted 24-MonthAverage Segment
Rates, Based on Applicable Percentage
of 25-Year Average Rates
For Plan
Years
Beginning
In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
First
Segment
Second
Segment
Third
Segment
2012July20131.414.07
5.115.546.857.52
2013July20131.414.07
5.11
4.94
6.15
6.76
30-YEAR TREASURY SECURITIES
INTEREST RATES
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates
of interest on 30-year Treasury securities
during the four-year period ending on the
last day before the beginning of the plan
year. Notice 88–73, 1988–2 C.B. 383,
provides guidelines for determining the
weighted average interest rate. The rate
of interest on 30-year Treasury securities
for June 2013 is 3.40 percent. The Service
has determined this rate as the average
of the daily determinations of yield on
the 30-year Treasury bond maturing in
May 2043. The following rates were de-
termined for plan years beginning in the
month shown below.
For Plan Years
Beginning inPermissible Range
MonthYear
30-Year
Treasury
Weighted
Average90%to105%
July20133.443.093.61
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007–81 provides guide-
lines for determining the minimum present
value segment rates. Pursuant to that no-
tice, the minimum present value segment
rates determined for June 2013 are as fol-
lows:
First
Segment
Second
Segment
Third
Segment
1.24
4.255.43
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities
Division. Mr. Montanaro may be e-mailed
atRetirementPlanQuestions@irs.gov.
2013–31 I.R.B.118July 29, 2013

Table I
Monthly Yield Curve for June 2013
Derived from June 2013 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.32
20.55.1340.55.4760.55.5980.55.65
1.0
0.53
21.0
5.14
41.0
5.47
61.0
5.59
81.0
5.65
1.5
0.74
21.55.1641.55.4761.55.5981.55.65
2.0
0.95
22.0
5.17
42.0
5.48
62.0
5.59
82.0
5.65
2.51.1522.55.1842.55.4862.55.6082.55.66
3.01.3423.05.2043.05.4963.05.6083.05.66
3.51.5323.55.2143.55.4963.55.6083.55.66
4.01.7324.0
5.22
44.0
5.50
64.0
5.60
84.0
5.66
4.5
1.93
24.55.2344.55.5064.55.6084.55.66
5.0
2.14
25.05.2445.05.5065.05.6185.05.66
5.5
2.34
25.55.2545.55.5165.55.6185.55.66
6.02.5526.05.2646.05.5166.05.6186.05.66
6.5
2.76
26.55.2746.55.5166.55.6186.55.66
7.02.9627.0
5.28
47.0
5.52
67.0
5.61
87.0
5.66
7.53.1527.55.2947.55.5267.55.6187.55.67
8.03.3428.0
5.30
48.0
5.52
68.0
5.62
88.0
5.67
8.53.5128.55.3148.55.5368.55.6288.55.67
9.03.6829.05.3249.05.5369.05.6289.05.67
9.5
3.83
29.55.3349.55.5369.55.6289.55.67
10.03.9730.0
5.3450.05.54
70.0
5.62
90.0
5.67
10.5
4.10
30.55.3450.55.5470.55.6290.55.67
11.04.2231.0
5.3551.05.54
71.0
5.63
91.0
5.67
11.5
4.33
31.55.3651.55.5571.55.6391.55.67
12.04.4332.05.3752.05.5572.05.6392.05.67
12.54.5232.55.3752.55.5572.55.6392.55.67
13.04.6033.0
5.3853.05.55
73.0
5.63
93.0
5.68
13.5
4.67
33.55.3953.55.5673.55.6393.55.68
14.04.7334.0
5.3954.05.56
74.0
5.63
94.0
5.68
14.5
4.79
34.55.4054.55.5674.55.6494.55.68
15.04.8335.05.4155.05.5675.05.6495.05.68
15.5
4.88
35.55.4155.55.5775.55.6495.55.68
16.04.9236.0
5.4256.05.57
76.0
5.64
96.0
5.68
16.54.9536.55.4256.55.5776.55.6496.55.68
17.04.9837.0
5.4357.05.57
77.0
5.64
97.0
5.68
17.55.0137.55.4457.55.5877.55.6497.55.68
18.05.0338.05.4458.05.5878.05.6498.05.68
18.55.0638.55.4558.55.5878.55.6598.55.68
19.0
5.08
39.0
5.4559.05.58
79.0
5.65
99.0
5.69
19.55.1039.55.4659.55.5879.55.6599.55.69
20.0
5.11
40.0
5.46
60.0
5.59
80.0
5.65
100.0
5.69
July 29, 20131192013–31 I.R.B.

Expanded Eligibility for
Temporary Housing for
Individuals Displaced by
Severe Storms, Flooding, and
Tornadoes in Oklahoma
Notice 2013–47
This Notice amplifies the relief pro-
vided by Notice 2013–39, 2013–25 I.R.B.
1252, and Notice 2013–40, 2013–25
I.R.B. 1254, to reflect actions by the Fed-
eral Emergency Management Agency
(FEMA) subsequent to the release of those
notices.
BACKGROUND
On May 31, 2013, the Internal Revenue
Service released Notice 2013–39 and No-
tice 2013–40, providing emergency hous-
ing relief needed as a result of the devasta-
tion in Oklahoma caused by severe storms
and tornadoes occurring between May 18,
2013, and May 27, 2013. The relief in the
Notices covered the time periods and inci-
dent types identified in FEMA pronounce-
ments through May 27, 2013 (collectively
referred to as the FEMA Notice).
1
The
FEMA Notice announced that the Presi-
dent had issued a major disaster declara-
tion for the State of Oklahoma covering
severe storms and tornadoes beginning on
May 18, 2013, and continuing until May
27, 2013. The FEMA Notice also des-
ignated certain jurisdictions for Individ-
ual Assistance. To be eligible for tempo-
rary housing relief, individuals had to have
been residents of jurisdictions that FEMA
designated for Individual Assistance, re-
gardless of whether the designation oc-
curred before or after the release of Notice
2013–39 and Notice 2013–40.
Subsequently, on June 11, 2013, and
June 26, 2013, FEMA issued amendments
to expand the coverage of the FEMA No-
tice. In particular, (1) the incident period
for this disaster was amended to be May
18, 2013, through and including June 2,
2013; (2) the incident type for the dis-
aster was expanded to include flooding;
and (3) additional jurisdictions were des-
ignated for Individual Assistance.See
78 Fed. Reg. 36558 (June 18, 2013);
Amendment No. 6 to Notice of a Major
Disaster Declaration, FEMA.gov (June
26, 2013),http://www.fema.gov/disas-
ter/4117/notices/amendment-no-6.Be-
cause the parameters for relief provided
for in Notice 2013–39 and Notice 2013–40
are defined by reference to the specific
incidents and specific time period set forth
in the FEMA Notice, this Notice amplifies
Notice 2013–39 and Notice 2013–40 to
capture the additional incidents and time
periods that FEMA has designated or will
designate by amendments to the FEMA
Notice.
AMPLIFICATION
For purposes of Notice 2013–39 and
Notice 2013–40, the definition of the term
“Tornadoes” is amplified to include—
(1) the entire incident period that FEMA
designated in the FEMA Notice and all
amendments to the FEMA Notice (in-
cluding those amendments that FEMA
has made at the time this amplification
is released to the public and those it may
make at a later date), and (2) all incident
typescoveredbytheFEMANoticeand
all amendments to the FEMA Notice (in-
cluding those amendments that FEMA has
made at the time this amplification is re-
leased to the public and those it may make
at a later date).
EFFECTIVE DATE
This Notice is effective May 20, 2013
(the effective date of Notices 2013–39 and
2013–40).
EFFECT ON OTHER DOCUMENTS
Notice 2013–39 and Notice 2013–40
are amplified.
DRAFTING INFORMATION
The principal authors of this No-
tice are Spence Hanemann of the Office
of Associate Chief Counsel (Financial
Institutions & Products) and David Selig
of the Office of Associate Chief Counsel
(Passthroughs & Special Industries). For
further information regarding this Notice,
contact Mr. Hanemann at (202) 622–3980
(not a toll-free call).
Application of Wash Sale Rules
to Money Market Fund Shares
Notice 2013–48
PURPOSE
This notice proposes a revenue proce-
dure describing circumstances in which
the Internal Revenue Service (IRS) will
not treat a redemption of shares in a money
market fund as part of a wash sale under
§ 1091 of the Internal Revenue Code. The
proposed revenue procedure provides that
if a taxpayer realizes a loss upon a redemp-
tion of certain money market fund shares
and the amount of the loss is not more than
a specified percentage of the taxpayer’s
basis in such shares, the IRS will treat
such loss as not realized in a wash sale.
This proposed guidance is intended to
mitigate tax compliance burdens that may
result from proposed changes in the rules
that govern the prices at which certain
money market fund shares are issued and
redeemed. The Securities and Exchange
Commission (SEC) has issued proposed
regulations to effect these changes.See
Money Market Fund Reform, Securities
Act Release No. 9408, Investment Advi-
sors Act Release No. 3616, Investment
Company Act Release No. 30,551, 78 Fed.
Reg. 36834 (proposed June 5, 2013). The
proposed revenue procedure is drafted as
if the SEC had already adopted final rules
addressing floating net asset value in sub-
stantially the same form as the proposed
rules. If those rules are not adopted in sub-
stantially the same form as they have been
proposed, the revenue procedure proposed
by this notice may not be adopted or may
be adopted in materially modified form.
REQUEST FOR COMMENTS
The Treasury Department and the
IRS request comments on all aspects of
the proposed revenue procedure. Con-
sideration will be given to any written
public comments that are submitted on
or before October 28, 2013. A signed
original and eight (8) copies of public
comments should be sent by mail to In-
ternal Revenue Service, CC:PA:LPD:PR
(IRS Notice 2013–48), Room 5203, PO
1
These pronouncements include a May 20, 2013, FEMA Notice (FEMA–4117-DR), 78 Fed. Reg. 36556 (June 18, 2013), and Amendment 2 to that initial notice, 78Fed. Reg. 34117 (June
6, 2013).
2013–31 I.R.B.120July 29, 2013

Box 7604, Ben Franklin Station, Wash-
ington, DC 20044. Public comments also
may be hand-delivered Monday through
Friday between the hours of 8 a.m. and
4 p.m. to the Courier’s Desk, Internal
Revenue Service, 1111 Constitution Av-
enue, N.W., Washington, DC 20224, Attn:
CC:PA:LPD:PR (IRS Notice 2013–48).
Comments also may be transmitted elec-
tronically to the following e-mail address:
Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2013–48” in both
the subject line of the e-mail and the body
of the comment. All comments will be
available for publicinspection and copy-
ing.
DRAFTING INFORMATION
The principal author of this notice is
Steven Harrison of the Office of Associate
Chief Counsel (Financial Institutions
& Products). For further information
regarding this notice, contact Mr. Harrison
at (202) 622–3930 (not a toll-free call).
PROPOSED REVENUE PROCEDURE
SECTION 1. PURPOSE
This revenue procedure describes cir-
cumstances in which the Internal Revenue
Service (IRS) will not treat a redemption of
shares in a money market fund (MMF) as
part of a wash sale for purposes of § 1091
of the Internal Revenue Code.
SECTION 2. BACKGROUND
.01 Money Market Funds
(1)AnMMFisatypeofinvestment
company registered under the Investment
Company Act of 1940 (1940 Act) and
regulated as a money market fund un-
der Rule 2a–7 under the 1940 Act (17
C.F.R. § 270.2a–7). Unlike other types
of mutual funds, MMFs have historically
sought to keep stable (typically at $1.00)
the prices at which their shares are issued
and redeemed. The types of securities
thatMMFsarepermittedtoholdandthe
share-pricing and valuation methods spe-
cific to MMFs have made stable prices
possible.
(2) To be treated as an MMF, an invest-
ment company must meet the requirements
specified in Rule 2a–7, which, among
other things, establishes limitations as to
the maturity, quality, diversification, and
liquidity of an MMF’s investments. Gen-
erally, an MMF must hold a diversified
portfolio of short-term, low-risk securi-
ties. The securities that an MMF holds
generally result in no more than minimal
fluctuations in the MMF’s net asset value.
(3) Previously, an MMF meeting the re-
quirements of Rule 2a–7(c) was permitted
by that provision to compute its price per
share for purposes of issuance and redemp-
tion by using either or both of (a) the amor-
tized cost method of valuation and (b) the
penny-rounding method of pricing. Un-
der the amortized cost method, an MMF’s
net asset value is determined by treating
the fund’s portfolio securities as having a
value equal not to their then-current fair
market value but rather to their acquisi-
tion cost, adjusted for amortization of pre-
mium or accretion of discount. Under the
penny-rounding method, an MMF’s net as-
set value per share is rounded to the near-
est one percent. These methods generally
enabled MMFs to maintain constant share
prices except in situations in which the
amortized cost method or penny-round-
ing method resulted in a variation in share
price that exceeded one-half of one percent
(commonly called “breaking the buck”).
(4) The perceived safety and simplicity
of MMFs have led to their widespread use
as cash management vehicles. It is there-
fore common for investors to purchase and
redeem MMF shares frequently. An MMF
is often used as a sweep account into which
cash is automatically deposited on a daily
basis. MMFs generally declare dividends
daily and distribute them monthly. MMF
shareholders typically reinvest these distri-
butions automatically in the MMF.
(5) The Securities and Exchange Com-
mission (SEC) has limited the situations
in which an MMF is permitted to use the
amortized cost method to those in which
other mutual funds are permitted to use
this method. [Cite final SEC rules.] In
addition, the SEC hasrestricted the use
of the penny-rounding method to govern-
ment MMFs and retail MMFs.
1
In the case
of an MMF that is neither a government
MMF nor a retail MMF, Rule 2a–7 now
requires the MMF to value its portfolio se-
curities using market-based factors and to
issue and redeem shares at a price that is
rounded to the nearest basis point, or one
one-hundredth of one percent (basis point
rounding).
2
(6) An MMF that uses market factors
to value its securities and uses basis point
rounding to price its shares for issuance
and redemption will have a share price that
changes frequently, or “floats” (a floating-
NAV MMF). A floating-NAV MMF will
therefore resemble other mutual funds that
are not MMFs, except for the restrictions
on the assets that an MMF is permitted to
hold and the unique role that MMFs have
historically occupied.
(7) Constant share prices have simpli-
fied the taxation of MMF share transac-
tions because a shareholder does not real-
ize gain or loss when a share is redeemed
for an amount equal to its basis. Share-
holders will typically realize gain or loss,
however, on redemptions of floating-NAV
MMF shares. In certain circumstances, a
loss realized on the redemption of an MMF
share may implicate the wash sale rules of
§ 1091, as discussed in section 2.02 of this
revenue procedure.
(8) Sections 6045, 6045A, and 6045B
establish certain reporting requirements
relating to securities. Each of those
sections has an exception for an MMF
that stabilizes its share price at a constant
amount that approximates its issue price
or the price at which it was originally sold
to the public.See§§ 1.6045–1(c)(3)(vi),
1.6045A–1(a)(1)(v), and 1.6045B–1(a)(5)
of the Income Tax Regulations. A float-
ing-NAV MMF that does not stabilize its
share price at a constant amount is not eli-
gible for those exceptions. Sections 6045,
6045A, and 6045B, however, also contain
exceptions for certain transactions in-
volving exempt recipients, which include
subchapter C corporations and certain
other entities.See§§ 1.6045–1(c)(3)(i),
1.6045A–1(a)(1)(iii), and 1.6045B–
1(a)(4).Most shareholders of
floating-NAV MMFs are expected to
be exempt recipients, which will reduce
1
A government MMF is an MMF that maintains at least 80 percent of its assets incash and certain government securities and repurchase agreements. A retailMMFisanMMFthatlimits
each shareholder’s redemptions to $1 million per business day.
2
The SEC has also amended Rule 2a–7 to require every MMF to disclose daily the fund’s current net asset value (NAV) per share rounded to the nearest basis point, but government and retail
MMFs are not required to use basis point rounding to issue and redeem shares.
July 29, 20131212013–31 I.R.B.

reporting obligations for transactions in
floating-NAV MMF shares.
.02 Wash Sale Rules
(1) Section 1091(a) disallows a loss re-
alized by a taxpayer on a sale or other dis-
position of shares of stock or securities if,
within a period beginning 30 days before
and ending 30 days after the date of such
sale or disposition, the taxpayer acquires
(by purchase or by an exchange on which
the entire amount of gain or loss is recog-
nized by law), or enters into a contract or
option to so acquire, substantially identical
stock or securities (unless the taxpayer is a
dealer in stock or securities and the loss is
sustained in a transaction made in the ordi-
nary course of such business).
(2) Under § 1091(d), a taxpayer’s ba-
sis in the property theacquisition of which
resulted in the nondeductibility of a loss
under § 1091(a) equals the basis of the
stock or securities disposed of, increased
or decreased to take into account any dif-
ference between the price at which the re-
placement property was acquired and the
price at which the original stock or securi-
ties were disposed of.
(3) A shareholder that redeems shares
in a floating-NAV MMF may realize a loss
on the redemption. Moreover, because
many MMF shareholders engage in fre-
quent purchases of MMF shares (includ-
ing purchases made as a result of sweep
arrangements and reinvestments of distri-
butions), a shareholder that realizes a loss
on a redemption of MMF shares will often
acquire shares in that MMF within 30 days
before or after the redemption.
(4) Redemptions of shares of MMFs,
which have relatively stable values even
when share prices float, do not give rise to
the concern that § 1091 is meant to address.
Moreover, given the expected volume of
transactions in MMF shares, tracking wash
sales of MMF shares will present share-
holders of floating-NAV MMFs with sig-
nificant practical challenges. Therefore, it
is in the interest of sound tax administra-
tion to prescribe circumstances in which
the IRS will not treat a redemption of these
MMF shares as part of a wash sale under
§ 1091. Those circumstances are set forth
in sections 3 and 4 of this revenue proce-
dure.
SECTION 3. SCOPE
This revenue procedure applies to a
redemption of one or more shares in an
investment company registered under the
1940 Act if—
.01 The investment company is regu-
lated as an MMF under Rule 2a–7 and
holds itself out to the public as an MMF;
and
.02 At the time of the redemption, the
investment company is a floating-NAV
MMF.
SECTION 4. APPLICATION
.01 If a redemption is within the scope
of section 3 of this revenue procedure and
results in ade minimisloss, the IRS will
not treat such redemption as part of a wash
sale. Therefore, § 1091(a) will not disal-
low the deduction for the resultingde min-
imisloss in the year realized and § 1091(d)
will not cause the basis of any property to
be determined by reference to the basis of
the redeemed shares.
.02 Solely for purposes of section 4.01
of this revenue procedure, the termde min-
imisloss means a loss realized upon a re-
demption of a share of stock of an MMF
the amount of which (expressed as a pos-
itive number) is not more than one half of
one percent (0.5%) of the taxpayer’s basis
in that share.
.03 In determining whether a loss is a
de minimisloss within the meaning of sec-
tion 4.02 of this revenue procedure, a tax-
payer must use the same basis determina-
tion method and lot selection method un-
der § 1012 and the regulations thereun-
der that the taxpayer uses to determine the
amount of its gain or loss for purposes of
calculating taxable income.
EXAMPLES
.01Example 1. (1) Fund is an MMF that meets
the requirements of Rule 2a–7 under the 1940 Act
and holds itself out to the public as an MMF. Fund
is a floating-NAV MMF at all times during year 1.
Before September 1 of year 1, Taxpayer, a domestic
corporation that is taxable under subchapter C of
Chapter 1 of the Internal Revenue Code, holds no
shares of Fund. On September 1 of year 1, Taxpayer
invests $1,000,000.00 in Fund when Fund’s price
per share is $1.0000, receiving in return 1,000,000
shares of Fund. On October 1 of year 1, Taxpayer
invests an additional $250,000.00 in Fund when
Fund’s price per share is $1.0005, receiving in return
249,875.06 shares, which Taxpayer holds in the same
account. On October 15 of year 1, Taxpayer redeems
$200,000.00 of Fund shares from the same account
when Fund’s price per share is $0.9980. Taxpayer
engages in no other transactions in Fund shares or
any substantially identical shares or securities during
year 1. Fund is a regulated investment company
within the meaning of § 1.1012–1(e)(5) and Taxpayer
uses the average basis method to determine the basis
of its shares.
(2) Taxpayer’s average basis in each Fund share
increased to $1.0001 when Taxpayer purchased
249,875.06 shares on October 1 ($1,250,000.00 to-
tal purchase price divided by 1,249,875.06 shares).
Based on Fund’s market NAV on October 15,
Taxpayer redeemed 200,400.80 shares to receive
$200,000.00 in proceeds. Taxpayer therefore realizes
a loss of $420.83 on the October 15 redemption (pro-
ceeds of $200,000.00 minus basis of $200,420.83 in
redeemed shares), or a loss of $.0021 per share (pro-
ceeds of $.9980 per share minus basis of $1.0001 per
share). This loss is a
de minimisloss under section
4.02 of this revenue procedure because the loss of
$.0021 per share is less than $.0050 per share (.5%
of $1.0001). Therefore, under section 4.01 of this
revenue procedure, the IRS will not treat the loss on
each Fund share as subject to current disallowance
under § 1091.
.02
Example 2. (1) The facts are the same as in
Example 1, except that Fund’s price per share at the
time of the October 15 redemption is $0.9940.
(2) As in Example 1, Taxpayer’s average basis
in each Fund share is $1.0001 after the second pur-
chase. Based on Fund’s market NAV on October
15, Taxpayer redeemed 201,207.24 shares to receive
$200,000.00 in proceeds. Taxpayer therefore real-
izes a loss of $1,227.36 on the October 15 redemption
(proceeds of $200,000 minus basis of $201,227.36 in
redeemed shares), or a loss of $.0061 per share (pro-
ceeds of $.9940 per share minus basis of $1.0001 per
share). Because the loss of $.0061 per share is more
than $.0050 per share (.5% of $1.0001), Taxpayer’s
loss is not a
de minimislossundersection4.02of
this revenue procedure and is subject to current disal-
lowance under § 1091. The entire loss is disallowed
under § 1091(a) because Taxpayer purchased more
than 201,207.24 shares on October 1.
(3) Taxpayer’s basis in its Fund shares after
the application of § 1091(a) is determined as fol-
lows. First, Taxpayer’s basis in 201,207.24 of the
249,875.06 shares it purchased on October 1 is in-
creased to $202,454.71 (Taxpayer’s $201,227.36
basis in the sold shares, increased by $1,227.36,
which is the difference between the $201,227.36
basis in the replacement shares and the $200,000.00
received for the sold shares). Second, the average
basis of all Fund shares held by Taxpayer is deter-
mined by dividing Taxpayer’s total basis in its Fund
shares of $1,050,000.00 (the sum of the $202,454.71
basis in the replacement shares computed above and
the $847,545.29 basis in the remaining 847,460.58
shares)byTaxpayer’stotalremainingFundshares
of 1,048,667.82. Accordingly, Taxpayer’s average
basis in each Fund share on October 15, year 1 is
$1.0013.
SECTION 5. EFFECTIVE DATE
[RESERVED]
2013–31 I.R.B.122July 29, 2013

SECTION 6. DRAFTING
INFORMATION
The principal author of this rev-
enue procedure is Steven Harrison of
the Office of Associate Chief Counsel
(Financial Institutions & Products). For
further information regarding this revenue
procedure contact Mr. Harrison at (202)
622–3930 (not a toll-free call).
July 29, 20131232013–31 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case,the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2013–31 I.R.B.iJuly 29, 2013

Numerical Finding List
1
Bulletins 2013–27 through 2013–31
Announcements:
2013-35, 2013-27 I.R.B.46
Notices:
2013-41, 2013-29 I.R.B.60
2013-42, 2013-29 I.R.B.61
2013-43, 2013-31 I.R.B.113
2013-44, 2013-29 I.R.B.62
2013-45, 2013-31 I.R.B.116
2013-46, 2013-31 I.R.B.117
2013-47, 2013-31 I.R.B.120
2013-48, 2013-31 I.R.B.120
Revenue Procedures:
2013-28, 2013-27 I.R.B.28
2013-32, 2013-28 I.R.B.55
Revenue Rulings:
2013-15, 2013-28 I.R.B.47
Treasury Decisions:
9620, 2013-27 I.R.B.1
9621, 2013-28 I.R.B.49
9622, 2013-30 I.R.B.64
9623, 2013-30 I.R.B.73
9624, 2013-31 I.R.B.86
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2013–1 through 2013–26 is in Internal Revenue Bulletin
2013–26, dated June 24, 2013.
July 29, 2013ii2013–31 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2013–27 through 2013–31
Notices:
2013-39
Amplified by
Notice 2013-47, 2013-31 I.R.B.
120
2013-40
Amplified by
Notice 2013-47, 2013-31 I.R.B.
120
Revenue Procedures:
81-60
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
83-59
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
86-42
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
90-52
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
96-30
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2003-48
Obsoleted in part and superseded in part by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2009-25
Pilot program discontinued by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2012-25
Obsoleted in part by
Rev. Proc. 2013-28, 2013-27 I.R.B.
28
2013-1
Amplified and modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2013-3
Amplified and modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
Treasury Decisions:
9612
Corrected by
Ann. 2013-35, 2013-27 I.R.B.
46
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2013–1 through 2013–26 is in Internal Revenue Bulletin 2013–26, dated June 24, 2013.
2013–31 I.R.B.iiiJuly 29, 2013

INDEX
Internal Revenue Bulletins 27 through 31
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parentheses refer to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Accommodations for nonprofit organizations with religious ob-
jections to providing contraceptive services (TD 9624) 31,86
Exemption for religious employers from the requirement to pro-
vide coverage for contraceptive services (TD 9624) 31,86
Regulations:
26 CFR 54.9815–2713, added (certain preventive services un-
der the ACA) (TD 9624) 31,86
26 CFR 54.9815–2713A, added (certain preventive services
under the ACA) (TD 9624) 31,86
Weighted average interest rates:
Segment rates for:
July 2013 (Notice 46) 31,117
Wellness regulations related to rewards, plan design, and alter-
natives to avoid prohibited discrimination (TD 9620) 27,1
EXCISE TAX
Accommodations for nonprofit organizations with religious ob-
jections to providing contraceptive services (TD 9624) 31,86
Exemption for religious employers from the requirement to pro-
vide coverage for contraceptive services (TD 9624) 31,86
Indoor tanning services; excise taxes (TD 9621) 28,49
Regulations:
26 CFR 40.0–1 (amended); 40.6302(c)–1 (amended) (indoor
tanning services) (TD 9621) 28,49
26 CFR 54.9815–2713, added (certain preventive services un-
der the ACA) (TD 9624) 31,86
26 CFR 54.9815–2713A, added (certain preventive services
under the ACA) (TD 9624) 31,86
Transition relief for2014 under sections6055, 6056, and 4980H
(information reporting and employer shared responsibility pro-
visions) (Notice 45) 31,116
EXCISE TAX—Cont.
Wellness regulations related to rewards, plan design, and alter-
natives to avoid prohibited discrimination (TD 9620) 27,1
INCOME TAX
Application of section 108(i) to partnerships and S corporations
(TD 9623) 30,73
Average area purchase price safe-harbor guidance for 2013 (RP
28) 27,28
Croatian per se entity (Notice 44) 29,62
Deferred discharge of indebtedness income of corporations (TD
9622) 30,64
Deferred original issue discount deductions (TD 9622) 30,64
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
July 2013 (RR 15) 28,47
Letter rulings that address issues presented in transactions de-
scribed in sections 332, 351, 355, 368, and 1036 (RP 32) 28,
55
Low-income housing taxcredit (Notice 47) 31,120
Noncompensatory partnership options; correcting TD 9612 (Ann
35) 27,46
Premium tax credit, minimum essential coverage (Notice 41) 29,
60
Qualified exempt facility bonds (Notice 47) 31,120
Qualified residential rental projects (Notice 47) 31,120
Regulations:
26 CFR 1.108(i)–0, 26 CFR 1.108(i)–1, and 26 CFR
1.108(i)–3 added (deferred discharge of indebtedness in-
come of corporations and deferred original issue discount
deductions) (TD 9622) 30,64
26 CFR 1.108(i)–2, added; 1.108(i)–2T, removed (application
of section 108(i) to partnerships and S corporations) (TD
9623) 30,73
Section 5000A transition relief for employees eligible to enroll
in non-calendar year health plans (Notice 42) 29,61
Timeline for implementation of the requirementsunder sections
1471–1474, commonly known as FATCA (Notice 43) 31,113
Wash sales, money market fund shares (Notice 48) 31,120
July 29, 2013iv2013–31 I.R.B.

Internal Revenue Service
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ashington,DC20224
Official Business
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INTERNAL REVENUE BULLETIN
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