IRS Publishes PCOR Fees through September 2019

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making informed health decisions by advancing the quality and relevance of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending January through September 2019 and the applicable dollar amount is $2.45, which is multiplied by the number of covered lives determined for the appropriate period.

The PCOR program will sunset in 2019. The last payment will apply to plan years that end by September 30, 2019 and that payment will be due in July 2020. There will not be any PCOR fee for plan years that end on October 1, 2019 or later.

The PCOR fee is paid by the health insurer for fully insured plans. All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted benefit:

    • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
    • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCOR fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. Depending on when the plan starts and ends also can determine the fee per form. Participating employees and dependents are counted as covered lives. For HRA and health FSA plans, just count each participating employee as a covered life.

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019 which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. For the current year, clients will need to file the Form 720 by July 31, 2019.

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IRS Releases Adjusted PCOR Fee

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making health decisions by advancing the quality of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending:  January through September 2018 the applicable dollar amount is $2.39, which is multiplied by the number of covered lives determined for the appropriate period. For policy and plan years ending October through December 2018, the applicable dollar amount is $2.45.

All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted-benefit:

  • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
  • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCORI fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. For HRA and health FSA plans, just count each participating employee as a covered life.

Payment of the PCOR fee for the calendar 2018 plan year — the last year the fee applies — will be due by July 31, 2019 (payments may extend into 2020 for non-calendar-year plans).

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019, which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. Clients will need to file the Form 720 by July 31, 2019.

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MassHealth Reinstates HIRD Reporting for Employer Sponsored Health Plans

The Health Insurance Responsibility Disclosure (HIRD) form is a new state reporting requirement in Massachusetts beginning in 2018. This form differs from the original HIRD form that was passed into law in 2006 and repealed in 2014. The 2018 form is administered by MassHealth and the Department of Revenue (DOR) through the MassTaxConnect (MTC) web portal. The HIRD form is intended to assist MassHealth in identifying its members with access to employer sponsored health insurance who may be eligible for the MassHealth Premium Assistance Program. The HIRD form is required annually beginning in 2018. The reporting period opens on November 1 and must be completed by November 30 of the filing year. 

Any employers with six or more employees in Massachusetts in any month during the past 12 months preceding the due date of the form (November 30th of the reporting year) are required to annually submit a HIRD form. An individual is considered to be an employee if they were included on the employer’s quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. This includes all employment categories, full-time and part-time.

The HIRD form is reported through MassTaxConnect (MTC) web portal (https://mtc.dor.state.ma.us/mtc/_/#1). The MTC is where employer-taxpayers register to file returns, forms and make tax payments. To file your HIRD form, login to your MTC withholding account and select the “file health insurance responsibility disclosure” hyperlink. If you do not have a MTC account or you forgot your password or username, follow the prompts on the site or call the DOR at 614-466-3940.

INFORMATION REQUIRED FOR HIRD REPORTING

The HIRD Form will collect information about the employer’s insurance offerings, including:

  • Plan Information – plan year, renewal date.
  • Summary of benefits for all available health plans – information regarding in and out of network deductibles and out-of-pocket maximums can be found on the plan’s summary of benefits and coverage.
  • Eligibility criteria for insurance offerings – minimum probationary periods and hours worked per week to be eligible for coverage.  Employment based categories, such as full-time, part-time, hourly, salaried.
  • Total monthly premiums of all available health plans
  • Employer and employee shares of monthly premiums – information on employer and employee monthly contributions toward the cost of medical. Employer cost of coverage is your COBRA rate less 2% and less the employee contribution.

Due to the nature of the filing online, employers with employees in Massachusetts will need to complete this reporting themselves. However, Diversified Group may be able to assist you in the gathering of the required information. Please contact us by November 15th  if you need assistance with accumulating data.

Mass.gov has compiled a list of frequently asked questions regarding the HIRD form here.

3 reasons self-funding is a great option for smaller companies

This article was published on September 10, 2018 on BenefitsPro, written by Darick Bradford.

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Source: BenefitsPro

“Wait, what’s a self-funded plan again? And why does it make sense for my clients?”

These are questions I hear from brokers all the time. And I get it. Self-funding can be complex. But it’s time to get smarter about self-funded health benefit plan designs as this type of product could be a game-changer for your smaller clients.

Let’s start with the basics. What is a self-funded plan? Self-funding is an arrangement where an employer sponsors a self-funded health benefit plan and is financially responsible for employee covered claims up to a certain dollar amount. Covered claims in excess of this dollar amount are reimbursed to the employer through stop-loss insurance.

Larger organizations have used self-funding for years as a way to save costs, but more recently we’re also seeing smaller businesses offering self-funded health benefit plans to their employees.

The numbers back it up. Between 2013 and 2016, the percentage of small employers offering at least one self-funded health benefit plan increased from 13.3 percent to 17.4 percent—a 31 percent increase.

Why are more small businesses offering self-funded health benefit plans? I see three big reasons:

1: Self-funding can be a great tool to attract and retain employees.

When it comes to health care, employees want choice and affordable options. Self-funded health benefit plans can give your employees both. From comprehensive medical to preventive-only coverage, your employees will have a variety of options. And, they’ll have those choices at affordable prices. That can be a key tool to attracting and retaining employees in an increasingly tight labor market.

2: Self-funding provides flexibility.

Employers can customize their self-funded health benefit plans with different deductibles and coinsurance choices to fit their needs, whether it’s a preferred provider organization (PPO) plan design, consumer-directed health plan (CDHP) design, or a reference-based pricing or preventive-only plan design.

3: Self-funding can help lower employer costs.

There are a variety of ways self-funded health benefit plans can help employers lower costs. First, employers can receive refunds if there is a surplus of claim dollars in their prefund account at the end of the plan year. Second, claim dollars are not subject to state health insurance premium taxes, which can help lower costs (premium taxes average around 2 percent). And finally, self-funded health benefit plans give employers access to aggregate health claims data and demographic information. This data — available exclusively under a self-funded arrangement versus traditional health insurance — allows employers to better manage costs and encourage cost-savings measures their employees can practice, such as switching to generic medications, using in-network providers, and selecting a different level of care.

In the end, better understanding the ins and outs of self-funding will mean more choices for your small employer clients—and more success for you.

With some research and education on how self-funding works and the carriers/TPAs that offer administrative services, self-funded health benefit plan designs and stop-loss insurance, you can become well-versed in what’s available in the marketplace and learn if and when a self-funded health benefit plan design could be a potential fit for your smaller clients. Having a solid knowledge is a good start to have the advantage over another broker who didn’t evaluate self-funding as a viable option.

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Value Based Pricing Gaining

dgb-valuebased-blogWhile plenty of folks talk about value based, or reference based, pricing as though it’s a fad that has come and gone, we’re finding more interest from employers all the time. This may be because many like to brand it as another form of disruption, but regardless of how you brand it, value based pricing is becoming a more important part of our value proposition all the time. It’s becoming more widespread because it enables a self-funded plan to limit costs to an extent that few other measures, if any, can match. This is primarily because by negotiating in advance with hospitals to accept a schedule of fixed payments for certain healthcare services, carrier-sponsored provider networks can be bypassed.

The fact is that while value based pricing may be considered disruptive by many hospitals, it works. It is a transparent approach that can save a lot of money for self-funded health plans and their members. And finding ways to help self-funded employer plans provide high quality, high value healthcare to their members is our most important job.

Association Health Plans Final Rules Released

On June 19, 2018, the U.S. Department of Labor released the final rule on Association Health Plans (AHPs). The rule seeks to expand health coverage among small employer groups and self-employed individuals. It will make it easier for small business to join together to purchase health insurance without the myriad of regulations individual states and the Affordable Care Act (ACA) imposes on smaller fully insured employers. AHPs are not required to provide the essential health benefits (EHBs) package included in the ACA. The plans have been intended to provide less expensive options for small businesses, regional collectives, and industry groups that may not be able to purchase insurance through the public exchanges.

The rule broadens the definition of an employer under the Employee Retirement Income Security Act of 1974 (ERISA), to allow more groups to form association health plans and bypass rules under the Affordable Care Act. ERISA is the federal law that governs health benefits and retirement plans offered by large employers. Below is a comparison of the original proposed rule and the final rule just released.

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The final rules confirm that self-insured Association Health Plans are considered Multiple Employer Welfare Arrangements (MEWAs) and does not curtail a state’s ability to regulate self-insured AHPs. This means that self-insured AHPs will be subject to MEWA laws in each state where coverage is offered/where members are located. Self-insured AHPs will have to follow the MEWA rules of the state with the most restrictive rule on an issue by issue basis. The final rule did leave an opening for future self-insured AHPs with the following language on page 96 of the 198 page regulation: “a potential future mechanism for preempting State insurance laws that go too far in regulating self-insured AHPs…” But for now, there is not anything in the final regulation designed to help self-insured AHPs thrive.

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Commonsense Reporting Bill Introduced

dg-commonsense-reportingIn October, a bipartisan group of senators introduced a bill that would ease the ACA reporting mandates for employer-sponsored health plans. The bill would roll back the reporting requirements of Section 6056 and replace them with a voluntary reporting system. The bill would also allow payers to transmit employee notices electronically rather than having to send paper statements by mail.

While self-funded health plans must now comply with Sections 6055 and 6056, it is not yet clear how the bill would affect Section 6055 requirements. Senators Rob Portman of Ohio and Mark Warner of Virginia, sponsors of the bill, say their proposal would give the government a more effective way of applying premium tax credits to consumers who purchase insurance through an Exchange, something the administration has been trying to accomplish.

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