HIPAA Indiscrimination

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 54 [REG-114082-00] RIN 1545-
AY32

TITLE: HIPAA Nondiscrimination

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 and final regulations governing the provisions
prohibiting discrimination based on a health factor for group health
plans. The IRS is issuing the temporary and final 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
governing the provisions prohibiting discrimination based on a
health factor for group health plans and issuers of health insurance
coverage offered in connection with a group health plan under 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 group health plan
nondiscrimination 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 April 9, 2001.

ADDRESSES: Send submissions to:

CC:M&SP:RU (REG-114082-00),
room 5226,
Internal Revenue Service,
POB 7604,
Ben Franklin Station,
Washington, DC 20044.

Submissions may be hand-delivered to: CC:M&SP:RU (REG-114082-00),
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.gov/tax_regs/regslist.html.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Russ
Weinheimer at 202-622-6080; concerning submissions of comments or
requests for a hearing, Sonya Cruse at 202-622-7190 (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 collections of information are in §54.9802-1T (see the
temporary regulations published elsewhere in this issue of the
Federal Register). The collections of information are required so
that individuals denied enrollment in a group health plan based on
one or more health factors will be apprised of their right to enroll
in the plan without regard to their health. 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 required of
plans that have denied enrollment to individuals based on one or
more health factors.

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, W:CAR:MP:FP:S:O,
Washington, DC 20224. Comments on the collection of information
should be received by April 9, 2001. 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 a new §54.9802-1T to the Miscellaneous
Excise Tax Regulations. When these proposed 1 regulations are
published as final regulations, they will supplement the final
regulations in §54.9802-1 being published elsewhere in this
issue of the Federal Register. The proposed, temporary, and final
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

This regulation is not subject to the Unfunded Mandates Reform Act
of 1995 because the regulation is an interpretive regulation. It has
also been determined that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does not apply to this
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.
Comments are specifically requested on the clarity of the proposed
regulations and how they may be made easier to understand. 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 Operating Division Counsel/Associate Chief
Counsel (Tax Exempt and Government Entities), IRS. 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 the 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 continues to read in
part as follows: Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 54.9802-1 is amended to read as follows:

§54.9802-1 Prohibiting discrimination against participants and
beneficiaries based on a health factor.

[The text of the proposed amendments to this section is the same as
the text of §54.9802- 1T published elsewhere in this issue of
the Federal Register].

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

____________________________________________________________________

A previous §54.9802-1T was published in the Federal Register on
April 8, 1997. By operation of section 7805(e) of the Internal
Revenue Code, the previous §54.9802-1T expired on April 8,
2000. Proposed regulations containing the same text as previous
§54.9802-1T were also published on April 8, 1997, and final
regulations based on those proposed regulations are being published
elsewhere in this issue of the Federal Register as §54.9802-1.
The new §54.9802-1T being published elsewhere in this issue of
the Federal Register consists almost entirely of new guidance not
contained in the previous §54.9802-1T.

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