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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Is It Time to Self-Fund Your Benefit Plans?

After reading the article included below, we couldn’t help but agree that the question every employer should be asking this year is…Should I self-fund my employee benefit plan?

As the article discusses, this is a great time of year for companies to review their status, evaluate changes that have been made and consider new items for their 2018 benefit to-do list. The article includes 8 questions benefits managers should be asking themselves this year. But, we’d like to help you address one key question – Is Self-Funding Right for You or Your Client?

Whether you’ve been asking this question for some time or you’re new to the concept of self-funding, we’d be happy to explain the flexibility and potential for savings that a self-insured plan can offer. Gain control over your group health plan, eliminate the high costs of insurance premiums and obtain access to monthly claim reports – all with help from Diversified Group!

8 benefit management items to evaluate in 2018

This article was published on January 24, 2018 on Employee Benefit News, written by Zack Pace

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Even 20 years into the benefits business, I still can’t always immediately remember details about my clients’ benefits plan — a given employer’s standard measurement period, affordability safe harbor or health savings account trustee, for example. That’s why I track all of these details across 32 columns in a simple spreadsheet.

While I use this reference tool most every day, I find that January is a great month to go even further with the employers I work with, carefully reviewing each company, considering how the employer’s circumstances have changed, and proposing items of consideration for our mutual 2018 benefit to-do list.

Employers are wise to have a similar benefit to-do list when it comes to their 2018 planning process. Here are eight common questions that benefits managers may find wise to ask.

1. For calendar year 2018, is your organization a “large employer” subject to ACA employer shared responsibility? Meanwhile, is your organization a “large employer” per your state’s fully insured group health plan market?

Generally, employers that averaged 50 or more full-time employees + full-time equivalents in calendar year 2017 are subject to ACA shared responsibility for all of calendar year 2018. Importantly, penalty risks generally now begin accruing in January, not when the plan year begins (if the date differs).

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However, confusingly, in most states, the threshold to be considered a large employer for group health insurance contracts is an average of 51 or more full-time employee + full-time equivalents in the previous calendar year. How do the rules work in your state?

Now’s the time to finalize your 2017 calculation and determine your 2018 status for both employer shared responsibility and your state’s group health insurance market. And, yes, I’ve seen several employers average exactly 50 and be deemed a large employer regarding ACA employer shared responsibility and a small employer in reference to their fully insured group health plan contract. Talk about bad luck.

2. Is it time to self-fund the group medical plan?

The financial headwinds faced by fully insured plans have never been greater. Fully insured premiums are laden with the roughly 4% ACA premium tax (aka the Health Insurer Annual Fee), state premium taxes, the cost of various state-mandated benefits, and often robust retention and pooling point charges.

Thus, employers sponsoring group fully insured health plans should consider if moving to a self-funded contract (including so-called level-funding contracts) could be advantageous. Given the varying state regulations, state stop-loss minimums, organizational risk tolerance, reserve requirements and other variables, there is no one-size-fits-all answer to this question. Especially good times to perform a comprehensive self-funding evaluation are when your company crosses over from small group to large group and/or when meaningful claims experience becomes available from your fully insured vendor.

3. Is it time to self-fund the dental and short-term disability plans?

For most employers of size sponsoring plans that are not 100% employee paid (aka not voluntary), the answer to this question is simply “yes.” Run the math and make your decision.

4. Does benefit eligibility for life and disability vary by class?

For start-up companies, it’s not uncommon to offer better group life and disability benefits to certain classes, including management and executives. However, as employers grow, the budgetary and cultural reasons for doing so can quickly diminish or go away. A quick litmus test is simply asking yourself if the continuing benefit discrimination still makes sense.

Regardless if these benefits vary by class, is your group life plan compliant with the Section 79 nondiscrimination rules? Double-check with your attorney, accountant and benefits consultant.

5. Who is the health savings account trustee (i.e., the bank)? Is it linked to the health insurer?

If your organization sponsors a qualified high-deductible health plan, you likely allow employees to contribute to an HSA pre-tax through your Section 125 plan. Is the bank you selected still the best fit? Is the bank tied to your fully insured group health vendor? If yes, if you change your group health vendor, are your employees allowed to maintain the HSAs with this trustee with no fee changes? Should you consider moving to a quality stand-alone HSA vendor?

6. Does your firm employ anyone in California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico?

Most employers headquartered in these states (and territory) are acutely aware of the state disability requirements. However, given the advent of liberal telecommuting policies, it’s becoming more common for employers without physical locations in these states to employ individuals in these states. If you answered yes to this question, double-check your compliance with the state disability requirements. Your disability insurer or administrator can assist.

And, please note that, just this month (January 2018), New York became the latest state/jurisdiction to require paid family leave.

7. For firms offering retiree health plan benefits, are benefits for Medicare-eligible retirees and spouses self-funded?

While retiree health benefits have generally gone the way of the American chestnut tree, these benefits remain fairly common among certain sectors, such as higher education, government and certain nonprofits. Historically, most employers simply allowed Medicare-eligible retirees to remain on the employer’s active health plan, with the employer’s plan paying secondary to Medicare for Part A and Part B expenses and primary for prescription drug costs.

This arrangement was just fine when a really high annual prescription claim was $15,000. Now, $90,000 claims are not uncommon and $225,000 claims are possible. Does it still make sense to self-fund this retiree risk? In states where it is permissible, would it be prudent to transfer the risk by adopting a fully insured group Medicare Advantage plan or supplement program?

Regardless, all employers self-funding retiree health benefits should double-check that their individual stop-loss policy includes retirees.

And, regardless if retiree benefits are offered, all employers sponsoring self-funded health benefits should double-check that their individual stop-loss policy covers prescription drugs.

8. Is your firm required to file health and welfare Form 5550s? If so, who is handling the filings?

Generally, employers subject to ERISA that sponsor benefit plans that, at the beginning of the plan year, cover 100 or more participants, are required to file health and welfare 5500s and the related schedules. Some smaller employers must also file. Most multiple employer welfare arrangements (MEWAs) must file.

It’s very easy for health and welfare Form 5500 filing requirements to fall through the cracks. While U.S. Treasury’s penalties for non-filers are substantial, Treasury doesn’t keep track of who is required to file and thus doesn’t individually remind employers of this requirement. Further, this requirement doesn’t seem to be on the checklist of most auditors and accountants.

Employers should review all enrollment counts of all plans at the beginning of each year and consult with their accountant, attorney, and benefits consultant on the filing requirement and next steps.

I recommend avoiding the shortcut of saying “5500” in these discussions. Always say “the health and welfare 5500.” This practice will mitigate the risk that someone hears “5500” and thinks retirement plan 5500.

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