Self-Funded Non-Federal Governmental Plans

Procedures and Requirements for HIPAA Exemption Election

The following procedures and requirements apply with respect to a plan sponsor's election to exempt its group health plan from certain requirements of Title XXVII of the Public Health Service (PHS) Act:

An exemption for a self-funded, non-Federal governmental plan is not automatic. If the sponsor of a self-funded, non-Federal governmental plan wishes to exempt its plan from one or more of the requirements of Title XXVII from which the plan sponsor is permitted to exempt its plan, it must notify the Centers for Medicare & Medicaid Services (CMS) to that effect in writing. Final regulations amending 45 CFR § 146.180 (the Exchange and Insurance Market Standards for 2015 & Beyond, published May 27, 2014) refer to a new format by which sponsors of self-funded, non-Federal governmental plans may submit HIPAA Opt-Out elections. Now, instead of submitting HIPAA exemption elections via U.S. Mail or facsimile, sponsors must submit exemption elections electronically through the Non-Fed Module. After December 31, 2014, submission via the Non-Fed Module will be mandatory, and hard copy and emailed elections will no longer be accepted.

• An election applies for a single specified plan year, or, in the case of a plan provided pursuant to a collective bargaining agreement, for all plan years encompassed by the agreement.
• A plan sponsor may renew an opt-out election for a subsequent plan year (or period of plan coverage) by notifying CMS via the Non-Fed Module. 
• Under an opt-out election, the plan must provide for: (1) notice to enrollees, on an annual basis* and at the time of enrollment under the plan, of the fact and consequences of the election (See Model Notice to Enrollees. Use of model format is recommended but not required.)

IMPORTANT: The annual notice to plan enrollees generally must be disseminated BEFORE the plan year begins for a plan's initial exemption election and, in the case of an exemption election renewal, for any Title XXVII requirement from which the plan is permitted to be exempted but from which the plan was not exempt during the immediately preceding plan year.

A copy of the enrollee notice should be attached to the initial exemption election letter that is submitted to CMS. For more specific information about the electronic procedures through which an exemption election must be submitted, please refer to the following documents:

Updated Procedures and Requirements for HIPAA Exemption Election through the Health Insurance Oversight System (HIOS) (PDF)

HIOS Non-Fed Module User Manual (PDF)