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

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 http://www.irs.ustreas.gov/prod/

taxlregs/comments.html

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

§§ 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 §§ 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 §§ 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
16978 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Proposed Rules

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 §§ 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]

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