HIPAA Mental Health Parity Act

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[Reg-109704-97]

RIN 1545-AV12

HIPAA Mental Health Parity Act

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 mental health parity

requirements imposed on group health plans. These requirements were

added to the Internal Revenue Code by section 1532 of the Taxpayer

Relief Act of 1997. 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 mental

health parity requirements added by the Mental Health Parity Act of

1996 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 new mental health

parity 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 March 23, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-109704-97), room

5226, Internal Revenue Service, POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions may be hand-delivered between the

hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-109704-97), Courier's

Desk, 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/tax__regs/comments.html

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Russ

Weinheimer, (202) 622-4695; concerning submissions or to request a

hearing, Mike Slaughter, 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 Sec. 54.9812-1T (see the

temporary regulations published elsewhere in this issue of the Federal

Register). The collection of information is required if a plan wishes

to avail itself of an exemption provided under the statute. 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 in

order to obtain the benefit of being exempt from the mental health

parity requirement.

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

February 20, 1998. 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 Sec. 54.9812-1T 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

Sec. 54.9812-1T 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. Employers

with 50 or fewer employees are not subject to the law. Moreover, even

for employers that are subject to the mental health parity

requirements, no collection of information is required unless they

qualify for and claim the 1% increased cost exemption. Even for

employers subject to the law who claim the exemption, the estimated

time for each response is 2 minutes. Thus, for example, an employer

with 100 employees in its group health plan that claimed the 1%

increased cost exemption, that took advantage of the three-month

transitional period provided in the temporary regulations and that

received 10 requests to examine the assumptions used in claiming the

exemption would incur a total one-time burden of less than 4 hours. At

an estimated cost of $11 per hour, this would result in a one-time cost

of less than $44. This 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

[[Page 66968]]

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 an entry in numerical order to read as follows:

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

Section 54.9812-1 is also issued under 26 U.S.C. 9833. * * *

Par. 2. Section 54.9812-1 is added to read as follows:

Sec. 54.9812-1 Parity in the application of certain limits to mental

health benefits.

[The text of this proposed section is the same as the text of

Sec. 54.9812-1T published elsewhere in this issue of the Federal

Register].

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

[FR Doc. 97-33263 Filed 12-19-97; 8:45 am]

BILLING CODE 4830-01-U