Join us for a webinar tomorrow as we discuss the rules relating to high deductible health plans and their interaction with account-based plans such as FSAs, HRAs, and HSAs. You can also register for other upcoming HR webinars.
Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2015 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (“PCORI”). As background, PCORI was established as part of health care reform to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury. PCORI fees were first due by sponsors of self-insured group health plans and insurers last July for plan and policy years that ended on or after October 1, 2012. Under health care reform, most employer sponsors and insurers will be required to pay PCORI fees until 2019.
The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the applicable plan or policy year.
- For plan years that ended between January 1, 2014 and September 30, 2014, the fee is $2.00 per covered life and is due by July 31, 2015.
- For plan years that ended between October 1, 2014 and December 31, 2014, the fee is $2.08 per covered life and is due by July 31, 2015.
- The fee will be paid by July 31, 2016 for any plan years ending in 2015.
- NOTE: The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA.
Historical information for prior years:
- For plan years that ended between October 1, 2012 and December 31, 2012, the fee was $1 per covered life and was due by July 31, 2013.
- For plan years that ended between January 1, 2013 and September 30, 2013, the fee was $1 per covered life and was due by July 31, 2014.
- For plan years that ended between October 1, 2013 and December 31, 2013, the fee was $2 per covered life and was due by July 31, 2014.
The fee-amount per covered life generally increases each year based upon health expenditure data released by the Department of Health and Human Services annually. Employers that sponsor self-insured group health plans should report and pay PCORI fees using IRS Form 720, Quarterly Federal Excise Tax Return.
Final regulations issued by the Internal Revenue Service contain special rules regarding the types of plans and policies for which fees are due and also include several different methods that may be used by employers to determine the number of covered lives under each plan. There are additional rules for counting the number of covered lives under an HRA (in general, the fee applies on a per-covered employee basis for HRAs). Employers that sponsor self-insured plans should review these rules closely to ensure that the correct PCORI fees are paid.
Note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions. However, an employer’s payment of PCORI fees should be tax deductible as an ordinary and necessary business expense.
This alert was prepared for Benico, Ltd. by Peter Marathas, an ERISA and Executive Compensation lawyer with over 20 years’ experience assisting clients nationally with benefits and compensation matters. He is a partner at Marathas Barrow & Weatherhead LLP, a premier employee benefits, executive compensation and employment law firm. He can be reached at email@example.com or (617) 830-5456.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and out lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow & Weatherhead LLP are not obligated to provide updates on the information presented herin. Those reading this alert are encouraged to seek direct counsel on legal questions.
Thursday, June 24, at 2 PM ET / 1 PM CT, John Garven, President of Benico Ltd., and Bobbi Kloss, Director of Human Resources Management Services for the Benefit Advisors Network, will be conducting a webinar addressing this topic.
Ask yourself these questions…
- Is my company / organization an “Applicable Large Employer” (ALE) subject to the Affordable Care Act’s Employer Shared Responsibility provision? If “yes”, then…
- Do we employ variable hour or temporary employees? If yes, then…
- Have we conducted a look-back analysis to determine which variable hour employees must be offered benefits, and have we established measurement, stability and administrative periods for tracking them?
- Are we prepared to deal with the reporting requirements during 1Q2016 under Sections 6055 and 6056 of the Internal Revenue Code?
If you do not yet have a process in place for managing this aspect of compliance, then please register. Even if you feel that you are in pretty good shape with your compliance efforts, still consider registering if for no reason other than to reinforce your understanding of the law’s requirements.
To register, visit our webinars page.
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The U.S. Small Business Administration and the U.S. Small Business Majority (a national nonprofit advocacy organization) will continue their Affordable Care Act 101 Webinar Series for small businesses. The hour-long webinars will take place every other Thursday through June, and two Spanish-language webinars will be available.
The series is designed to help business owners understand key pieces of the law, including the small business health care tax credit, employer shared responsibility (“pay or play”), updates regarding the small business health insurance marketplace (SHOP), and resources available for small businesses interested in learning more about the law. The same webinar is offered each time.
The webinars will take place on the following dates:
- May 14, 2015 (register here)
- May 28, 2015 (register here)
- June 11, 2015 (register here)
- June 25, 2015 (register here)
Spanish-Language Webinars Also Available
The Spanish-language webinars will take place on the following dates:
After registering, you will receive a confirmation email with all of the information needed to access the webinar by telephone. A brief question and answer period will follow each presentation.
The Department of Labor (DOL) has issued its Final Rule revising the definition of “spouse” under the Family and Medical Leave Act.
The Final Rule adopts a “place of celebration” rule, consistent with the current DOL interpretation in the context of other federal laws. Under this “celebration” rule, an employee may take FMLA leave to care for an ill same-sex spouse even if they couple resides in a state that does not permit or recognize their marriage, as long as they were married in a jurisdiction that allowed their marriage. The new definition includes individuals in lawfully recognized same-sex and common law marriages and marriages that were validly entered into outside of the U.S. if they could have been entered into in at least one state.
The DOL has issued a number of FAQs explaining the change.
The effective date for the final rule is Today March 27, 2015.
In February 2015, the IRS released final forms and instructions related to information reporting under the Affordable Care Act (the “ACA”). These forms include Form 1095-B, Health Coverage, Form 1094-B, Transmittal of Health Coverage Information Returns, Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage.
The issuance of the final forms is a critical step in implementing the ACA’s reporting requirements, which enable the government to track compliance with the individual and employer mandates, and to determine eligibility for premium tax credits used to purchase health insurance coverage through a Health Insurance Marketplace (the “Marketplace”). Read more
The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056, and the clock is ticking! Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees. The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.
By Kelly Haab-Tallitsch – SmithAmundsen LLC
The Illinois Secure Choice Savings Act (Secure Choice Act) was quietly signed into law by Illinois Governor Pat Quinn over the weekend. The controversial legislation will require most businesses in Illinois to adopt a retirement savings plan for their employees by June 1, 2017.
The Secure Choice Act creates a state-run retirement savings program in which eligible workers can contribute to a Roth IRA through automatic payroll deductions from their paychecks. Employers with 25 or more employees, who do not offer another type of retirement program, will be required to offer the state-run IRA arrangement or be subject to a fine of $250 per employee per year. Employers that sponsor other types of private retirement plans, such as a 401(k) or pension plan, are not subject to the requirement or fines.
Once the Illinois Secure Choice Program is up and running – expected to be 2017 at the earliest – employees will be automatically enrolled in the program, with a default 3% payroll deduction per paycheck. Employees will have the option to change their deduction percent or to opt out of the program entirely. Employers and the state will not make contributions to employees’ accounts.
Finding the right insurance is now simple. We have partnered with GoHealth to provide an easy way to compare plans, estimate tax subsidies, and enroll in a plan that’s best for you. Licensed benefit advisors are available for assistance throughout the enrollment process. View our Smart Consumer Marketplace page for more info.
Get Benico’s 2015 Compliance Survival Kit, which includes the following:
- The Benico Health & Welfare Plan Compliance Guide
- Health and Welfare Compliance Checklist (which directly relates to the Guide)
- Health Care Reform – Employer Action Items for 2014 and Considerations for 2015
- Health Care Reform Compliance Timeline – Quick Reference Guide
- Welfare Plan Compliance Calendar
The 2015 Compliance Survival kit is authored by the employment law / employee benefit practice of Proskauer Rose, LLP, of counsel to the Benefit Advisors Network of which Benico is a member.
On August 15, 2014, California passed Senate Bill 1034, which repealed an insurance law (Assembly Bill 1083) that prohibited insurance companies from including waiting periods in excess of 60 days in their group health insurance contracts. The new law, effective January 1, 2015, prohibits California insurance companies from applying any “waiting or affiliation period” under a group or individual health benefit plan.
So where does that leave California employers, who are permitted under federal law (the ACA) to have a one-month orientation period and up to a 90-day waiting period? They’ll be able to continue applying ACA-compliant orientation periods and waiting periods, as the law prohibits carriers—but not employers—from imposing a waiting period. Therefore, the new California law aligns with the ACA and allows insurance carriers in California to administer enrollment in accordance the employer’s ACA-compliant orientation period and/or waiting period. It does, however, prohibit carriers from imposing a separate affiliation or waiting period in addition to any imposed by the employer. An affiliation period is the equivalent of a waiting period for coverage obtained in the individual (non-group) market.
The new law is intended to eliminate confusion between the state and federal rules governing health care enrollment waiting periods. Employers operating in multiple states will be able to have consistent waiting periods for employees in different states, if desired, which will make it easier to determine when a new hire or otherwise newly eligible employee must be enrolled in a health care plan.
Until the existing 60-day waiting period law is repealed effective January 1, 2015, employers with California health care plans that renew in 2014 should be able to apply a waiting period in accordance with the ACA (e.g., up to 90 days) as long as the carrier’s insurance contract does not impose a separate waiting period in addition to the employer’s waiting period.
Read more here
On Tuesday, June 3rd, the IRS issued a revised Form 720 and instructions for filing the PCORI fees by July 31, 2014. Filers will enter covered-lives counts and applicable rates ($1 for plan years ending before Oct. 1, 2013; $2 for plan years ending on or after Oct. 1, 2013) in Part II of Form 720 (line 133) to calculate the amount owed.
Instructions include a table for use by filers with plans or policies subject to both the $1 and $2 applicable rates. Though Form 720 is generally used for quarterly excise taxes, PCORI filers remit that fee annually – by July 31 – and complete only line 133 (unless also submitting excise taxes).
Under the Affordable Care Act, the PCORI fee applies to each plan or policy year that ends after Sept. 30, 2012, and before Oct. 1, 2019.
Link to a copy of Form 720:
Link to instructions to Form 720:
On May 1, 2014, CMS released the most detailed exchange enrollment analysis to date. The analysis includes data from October 1, 2013- April 19, 2014.
- 8,019,763 people selected marketplace plans from October 1, 2013 through April 19, 2014.
- Nearly 2.6 million signed up via state-based exchanges, and there were over 5.4 million plan selections via the federally facilitated and partnership marketplaces.
- About 3.8 million people were procrastinators and enrolled from March 2-April 19.
- Of the more than 8 million:
- 54% female, 46 % male
- 63% Caucasian, 17% African-American, 11% Latino, and 8% Asian
- 34% < 35 years old;
- 28% are between 18 and 34 years of age;
- 65% selected a Silver plan;
- 20% went with a Bronze plan; and
- 85% were eligible for a premium tax credit
Being a red state or a blue state didn’t really matter. More than a third of the sign-ups came from three states with large numbers of uninsured residents. California had 1.4 million of its citizens sign up, whereas Florida and Texas brought in 980,000 and 730,000 enrollees respectively. The next closest states were New York and North Carolina, which each signed up more than 350,000 residents.
The states that enrolled the smallest % of their uninsured populations were Iowa, South Dakota, and Massachusetts.
I was privileged to be asked to speak at the 43rd Annual Mini-Institute for the Central Illinois Society of Financial Service Professionals on May 1st in Bloomington, Illinois on the subject of “Health Care Reform – Challenges and Opportunities”. Basically the speech provided a retrospective (what’s occurred to date), perspective (what’s currently in play), and prospective (what things may look like in the near and longer terms) around the Patient Protection & Affordable Care Act (PPACA). Since it was geared to financial advisors, the takeaways address the sorts of things that advisors should be speaking with their clients about as it relates to the law and its impact on their lives and businesses.
2013 “early renewals” in the small employer group market and end of 2014 compliance and cost management strategies
At the end of 2013 many companies and organizations with less than 50 employees did something called an “early renewal” with their group health insurance plans as a means of kicking the can down the road, many until December 1, 2014, to defer their compliance with Health Care Reform for up to 11 months. The principal reason for doing such in most cases was to avoid a significant rate increase at the end of 2013 with the thought of “Let’s buy some time”.
QUESTION – If your company is one of these companies that bought some time by doing an early renewal, what is your strategy at the end of 2014 for reasonably managing costs of complying then?
Did you know that there are viable group health insurance financing options available in the market to help you avoid the Health Care Reform “cost conundrum” later this year when your company’s / organization’s group plan renews? Self-insurance either with an insurance company or third party administrator (TPA) providing plan administration and purchasing catastrophic insurance coverage called “stop loss insurance” will, no doubt, be a solution for many small employers wrestling with this issue this year.
Self-insured medical plans are exempt from some of the more onerous provisions of Health Care Reform, such as the Health Insurance Tax (HIT) and Modified Community Rating. Avoiding these two aspects of Health Care Reform alone can result in saving tens and even potentially hundreds of thousands of dollars of expense.
Benico, Ltd. provides private companies, public sector employers, and not-for-profit organizations of all sizes with strategic advice around the design, risk management, communication, and enrollment of their health and welfare plans and with compliance around the laws and regulations relating to the same. To discuss your company’s situation, please contact Benico’s principal, John Garven, at 847-669-4800, ext. 202.