[Federal Register Volume 62, Number 67 (Tuesday, April 8, 1997)]
[Proposed Rules]
[Pages 16977-16978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8267]



Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / 
Proposed Rules

[[Page 16977]]



DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[Reg-253578-96]
RIN 1545-AV12


Health Insurance Portability for Group Health Plans

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: Elsewhere in this issue of the Federal Register, the IRS is 
issuing temporary regulations relating to group health plan 
portability, access, and renewability requirements added to the 
Internal Revenue Code by section 401 of the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA). The IRS is issuing 
the temporary regulations at the same time that the Pension and Welfare 
Benefits Administration of the U.S. Department of Labor and the Health 
Care Financing Administration of the U.S. Department of Health and 
Human Services are issuing substantially similar interim final 
regulations relating to the group health plan portability, access, and 
renewability requirements added by HIPAA to the Employee Retirement 
Income Security Act of 1974 and the Public Health Service Act. The 
temporary regulations provide guidance to employers and group health 
plans relating to the obligation of plans to comply with new 
requirements relating to preexisting condition exclusions, 
discrimination based on health status, access to coverage, and other 
requirements. The text of those temporary regulations also serves as 
the text of these proposed regulations.

DATES: Written comments and requests for a public hearing must be 
received by July 7, 1997.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-253578-96), room 
5226, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered to: 
CC:DOM:CORP:R (REG-253578-96), room 5226, Internal Revenue Service, 
1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers 
may submit comments electronically via the Internet by selecting the 
``Tax Regs'' option on the IRS Home Page, or by submitting comments 
directly to the IRS Internet site at <a href="http://www.irs.ustreas.gov/prod/
tax__regs/comments.html">http://www.irs.ustreas.gov/prod/
tax__regs/comments.html</a>

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Russ 
Weinheimer, (202) 622-4695; concerning submissions or to request a 
hearing, Christina D. Vasquez, 202-622-7180. These are not toll-free 
numbers.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information referenced in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)).
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    The collection of information is in Secs. 54.9801-3T, 54.9801-4T, 
54.9801-5T, 54.9801-6T, and 54.9806-1T (see the temporary regulations 
published elsewhere in this issue of the Federal Register). This 
information is required by the statute so that participants will be 
informed about their rights under HIPAA and about the amount of 
creditable coverage that they have accrued under a group health plan. 
The likely respondents are business or other for-profit institutions, 
nonprofit institutions, small businesses or organizations, and Taft-
Hartley trusts. Responses to this collection of information are 
mandatory.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attn: Desk Officer for the Department 
of the Treasury, Office of Information and Regulatory Affairs, 
Washington, DC 20503, with copies to the Internal Revenue Service, 
Attn: IRS Reports Clearance Officer, T:FP, Washington, DC 20224. 
Comments on the collection of information should be received by June 9, 
1997. Comments are specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see the preamble to the temporary 
regulations published elsewhere in this issue of the Federal Register);
    How to enhance the quality, utility, and clarity of the information 
to be collected;
    How to minimize the burden of complying with the proposed 
collection of information, including the application of automated 
collection techniques or other forms of information technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

Background

    The temporary regulations published elsewhere in this issue of the 
Federal Register add Secs. 54.9801-1T through 54.9801-6T, 54.9802-1T, 
54.9804-1T, and 54.9806-1T to the Miscellaneous Excise Tax Regulations. 
These regulations are being published as part of a joint rulemaking 
with the Department of Labor and the Department of Health and Human 
Services (the joint rulemaking).
    The text of those temporary regulations also serves as the text of 
these proposed regulations. The preamble to the temporary regulations 
explains the temporary regulations.

Special Analyses

    Pursuant to sections 603(a) and 605(b) of the Regulatory 
Flexibility Act, it is hereby certified that the collection of 
information referenced in this notice of proposed rulemaking (see 
Secs. 54.9801-3T, 54.9801-4T, 54.9801-5T, 54.9801-6T and 54.9806-1T of 
the temporary regulations published elsewhere in this issue of the 
Federal Register) will not have a significant economic impact on a 
substantial number of small entities. Although a substantial number of 
small entities will be subject to the collection of information 
requirements in these regulations, the requirements will not have a 
significant economic impact on these entities. The average time 
required to complete a certification required under these regulations 
is estimated to be 5 to 12 minutes for all employers. This average is 
based on the assumption that most employers will automate the 
certification process. The paperwork requirements other than 
certifications that are contained in the regulations are estimated to 
impose less than 10% of the burden imposed by the certifications. Many 
small employers that maintain group health plans have their plans 
administered by an

[[Page 16978]]

insurance company or third party administrators (TPAs). Most insurers 
and TPAs are expected to automate the certification process and 
therefore their average time to produce a certificate should be similar 
to the 5 to 12 minute average estimated for all employers. However, 
even for small employers that do not automate the certification 
process, the collection of information requirements in the regulation 
will not have a significant impact. Even if it is conservatively 
assumed that their average time to produce a certificate is 3 times as 
long as the highest estimate for all employers (i.e., 36 minutes per 
certificate) and that all of their employees are covered by their group 
health plan and that half of the employees receive a certificate each 
year, and this figure is then increased by 10% to account for the 
paperwork burdens apart from the certifications, the average burden per 
employee is only 20 minutes per year. Thus, for example, for an 
employer with 10 employees, the annual burden would be 3 hours and 20 
minutes per year. At an estimated cost of $11 per hour, this would 
result in a cost of less than $37 per year for the employer, which is 
not a significant economic impact.
    This regulation is not subject to the Unfunded Mandates Reform Act 
of 1995 because the regulation is an interpretive regulation. For 
further information and for analyses relating to the joint rulemaking, 
see the preamble to the joint rulemaking. Pursuant to section 7805(f) 
of the Internal Revenue Code, this notice of proposed rulemaking will 
be submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) that are submitted timely to the IRS. All 
comments will be available for public inspection and copying. A public 
hearing may be scheduled if requested in writing by a person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the hearing will be published 
in the Federal Register.

Drafting Information

    The principal author of these proposed regulations is Russ 
Weinheimer, Office of the Chief Counsel, Employee Benefits and Exempt 
Organizations. However, other personnel from the IRS and Treasury 
Department participated in their development. The proposed regulations, 
as well as the temporary regulations, have been developed in 
coordination with personnel from the U.S. Department of Labor and U.S. 
Department of Health and Human Services.

List of Subjects in 26 CFR Part 54

    Excise taxes, Health insurance, Pensions, Reporting and 
recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 54 is proposed to be amended as follows:

PART 54--PENSION EXCISE TAXES

    Paragraph 1. The authority citation for part 54 is amended by 
adding entries in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 54.9801-1 is also issued under 26 U.S.C. 9806.
    Section 54.9801-2 is also issued under 26 U.S.C. 9806.
    Section 54.9801-3 is also issued under 26 U.S.C. 9806.
    Section 54.9801-4 is also issued under 26 U.S.C. 9806.
    Section 54.9801-5 is also issued under 26 U.S.C. 9801(c)(4), 
9801(e)(3), and 9806.
    Section 54.9801-6 is also issued under 26 U.S.C. 9806.
    Section 54.9802-1 is also issued under 26 U.S.C. 9806.
    Section 54.9804-1 is also issued under 26 U.S.C. 9806.
    Section 54.9806-1 is also issued under 26 U.S.C. 9806. * * *

    Par. 2. Sections 54.9801-1, 54.9801-2, 54.9801-3, 54.9801-4, 
54.9801-5, 54.9801-6, 54.9802-1, 54.9804-1, and 54.9806-1 are added to 
read as follows:

    [The text of these proposed sections is the same as the text of 
Secs. 54.9801-1T, 54.9801-2T, 54.9801-3T, 54.9801-4T, 54.9801-5T, 
54.9801-6T, 54.9802-1T, 54.9804-1T, and 54.9806-1T published 
elsewhere in this issue of the Federal Register].
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 97-8267 Filed 4-1-97; 12:48 pm]
BILLING CODE 4830-01-P