PCORI Fee for Self-Funded Employers: Due July 2017

By Michael Berwanger, JD, Director, Quality Management & Compliance

 PCORI Required by ACA

PCORI due datesThe Affordable Care Act (ACA) includes provisions to promote research by the Patient-Centered Outcomes Research Institute (PCORI) that will provide information on the relative strengths and weaknesses of various medical interventions. This initiative is being funded by a tax that must be paid by insurers and plan sponsors of self-funded health plans. Per IRS Guidance, for self-insured and/or self-funded plans ending in 2016, filing and payment must be submitted to the IRS by July 31, 2017. The fees owed in 2017 are as follows:

  • For plan years* ending on or after October 1, 2015, and before October 1, 2016: $2.17 per covered life
  • For plan years* ending on or after October 1, 2016, and before October 1, 2017: $2.26 per covered life

*’Plan year’ is generally the 12-month period stated in the Summary Plan Description, or for plans filing a Form 5500, the plan year stated in that filing. NOTE: The plan year may be different from the benefit year or the renewal period.

 PCORI Fee Payments

PCORI due dateUnder the Internal Revenue Service (IRS) final rule, plan sponsors are responsible for paying the fee, which is treated as an excise tax by the IRS. A Quarterly Federal Excise Tax Return (Form 720) must be used when reporting liability for the fee. The form can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf. Instructions for completing and filing the form can be accessed at http://www.irs.gov/pub/irs-pdf/i720.pdf. Completion of the form is relatively simple.  As described here, only the relevant parts of the form need to be completed, which include:

  • Identifying information at the beginning of the form
  • Part II, line 133 (“Applicable self-insured plans” line)
  • Part III, items 3 and 10
  • The signature section
  • The voucher form, if the form is mailed
  • The form may be filed electronically or mailed to:

Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0009

Additional Tips

The following information may be helpful in determining your tax obligation under the PCORI provision:

  • The plan sponsor must apply a single calculation method in determining the average number of lives covered under the plan for the entire plan year. However, the plan sponsor is not required to use the same method from one plan year to the next.
  • HRA and Self-Insured Plans: A self-insured Health Reimbursement Account (HRA) is not subject to a separate fee if the HRA is integrated with another applicable self-insured health plan that provides major medical coverage. The HRA and the other plan must be established or maintained by the same plan sponsor with the same plan year.
    • However, if a self-insured HRA is integrated with an insured group health plan, then the fee must be paid for both the self-insured product and the insured product.
  • Excepted Benefits: Excepted benefits (as defined under section 9832c of the U.S. Code) are exempt from the fee, as is a health Flexible Spending Account (FSA) that satisfies the requirements of an excepted benefit.
  • All plans that provide medical coverage to employees owe this fee. The insurer/carrier for fully-insured plans will pay the fee (typically, the fee is passed on to the plan). The plan sponsor for self-funded plans will pay the fee. Note, there is no exception for small employers, government, church or not-for-profit plans, nor for grandfathered plans or union plans. The fee is tax-deductible.
  • For more information, see: IRS FAQ or IRS chart that shows which plans owe the fee.

NOTE: MedCost is not a tax preparation company, and you may have additional tax obligations for other benefit plans that you offer to your employees. Please consult with your tax advisor for guidance. This blog post should not be considered as tax or legal advice.MedCost

 

Listening to the Voice of the Customer

Health care is complex. It always has been — even more so today in a continually changing industry and environment. MedCost strives to be the kind of partner that helps our customers navigate, translate and adapt to those changes.

When MedCost started as a small company, we were still using some of the principles we use today. We were sitting down and listening to the unique needs of the customer. We were using data even before there were sophisticated mechanisms to use data. To understand what was driving their costs, what providers they were utilizing, how we can essentially customize some sort of solution, whether it be a product, a program or a service to essentially help them better manage or to achieve what they were trying to achieve with their health plan.

In this time, in this industry, collaboration is more important than ever. We have a legal team, a communications team, a pharmacist, an underwriting team — all designed to essentially help support the employers, and bring some of the best new ideas to the employer to help them engage in new or better health and wellness programs. And also to drive lower costs for their population.

We essentially try to be one single source for an employer to come and partner with them — to not only design but to administer their health plans.

We’re interested in your unique needs. Contact Jason at jclarke@medcost.com or call 336.774.4283.MedCost

(This post is a transcript from the video, “Listening to the Voice of the Customer.” )

Self-Funded vs. Fully-Insured Health Plans (Infographic)

Why are more employers choosing self-funded versus fully-insured health plans? This infographic compares the fixed costs of self-funded employer plans, with potential savings available from health dollars not spent by the company.

In the event that an employer’s claims are larger than projected, stop-loss insurance that is purchased protects business assets.

Self-Funded vs. Fully-Insured

This short video, “Reasons to Consider Self-Funding,” gives four key reasons that over 58% of US employees are enrolled in self-funded health plans. Evaluate these reasons to see what is best for your business.MedCost

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How This Employer Reduced Health Costs – and Improved Employee Health

A Case Study

Reduced Health Costs Improved Employee Health

 

Executive Summary

Our client is a South Carolina municipality with an annual public budget of over $53 million, insuring 800 health plan members. The City of Aiken is governed by seven elected City Council members and Mayor.

The Challenge

Managing self-funded health costs, while providing excellent benefits for employees and their families.

Outcome

Reduced Health Costs Improved Employee Health

Savings achieved by:
  • Sending information quickly & accurately
  • Keeping cost trends low
  • Paying claims properly & promptly
  • Expert COBRA administration
  • Compliance education & direction
  • Personal client relationship
  • Responsive account management
“We highly value our relationship with MedCost. They have helped us tremendously with ACA regulations and plan administration. We’re very appreciative of how they take care of any issues.”  
 – Al Cothran, Revenue Administrator, City of Aiken, SC

Reduced Health Costs Improved Employee HealthHow Aiken Reduced Health Costs & Improved Employee Health

Al Cothran knows numbers. And the numbers that this Aiken Revenue Administrator saw in rising medical costs concerned him. This South Carolina municipality was a former member of a state municipal group that pooled self-funded health insurance. But increasing government regulations presented a stiff challenge, especially after the state municipal group ceased to exist in 2011.

The City wanted to continue to offer lower deductibles as their employees aged and needed more benefits. As a municipality that self-funded health expenses, the staff and City Council needed a benefits partner that could navigate a highly regulated industry while understanding their unique needs.

As premiums, pharmacy and claims costs skyrocketed throughout the health care industry, the City of Aiken turned to their long-time partner to preserve expenses—MedCost.

Benefits of MedCost Partnership

*Constant Access to Expert Nurse Consultants

Aiken began a wellness program in 2003 after several employees died of heart disease. In 2007, the City contracted with Aiken Regional Hospital for an RN to staff an onsite clinic three days per week. Services expanded to five days as sick leave use decreased, along with workers’ compensation claims.

Aiken’s contract nurse has greatly benefited from the training she has received from MedCost prenatal nurses, specialty case managers and nurse health coaches. The contract nurse transmits this knowledge to Aiken employees.

And the addition of obesity to the COACH program has affected Al personally. He has lost 60 pounds and changed his nutrition significantly. The City’s Comprehensive Health program (COACH) is producing a 2:1 return on their investment.

*Compliance Knowledge of Government Regulations

“MedCost’s compliance department alone is worth the price of admission,” said Al. Complex regulations and legislative changes in the Affordable Care Act presented huge hurdles for Al’s staff. MedCost experts provided timely updates and deadlines. MedCost’s seamless management of COBRA has also been a relief. “One of the best things we ever did was to turn COBRA over to MedCost,” said Al.

*Customized Reporting

MedCost’s specific, measurable analyses identify spending trends that empower Al and his staff to take action. Key observations categorize at-risk populations, with recommendations for cost containment. medicalMedCost Care Management programs help support Aiken’s RN, especially in complex cases of cancer, diabetes or cardiac conditions. Employees are encouraged to get regular screenings.

“You can’t put a monetary amount on the heart attack you prevented,” said Al.

*Help with Employee Dependents

“A lot of our big claims are for dependents,” Al said. “Those dealing with cancer have been very complimentary of MedCost case managers who have helped them.” MedCost staff helps pinpoint members who need nursing support while communicating with Aiken’s onsite RN – avoiding gaps in care that can be costly in every way.

“Our COACH program has been a huge benefit for us, in cost savings of premiums. I can’t tell you how many cities have toured our facility to see how we are doing wellness. We highly value our relationship with MedCost.”MedCost

This case study was published with permission from the City of Aiken, SC.

7 Ways to Manage Medical Cost for Employers (Infographic)

medical cost

*Discover more resources about MedCost Care Management programs hereOr browse through seven ways to manage medical cost:

  1. Complex Case Management 
  2. Inpatient Management
  3. Outpatient Management
  4. Telehealth Services
  5. Nurse Health Coaching
  6. Maternity Management
  7. Behavioral Health

To print this infographic, click on the title and scroll to “PRINT THIS PAGE” at the bottom.MedCost

Fully-Insured vs. Self-Funded Health Plans (Infographic)

Has your company examined the differences between fully-insured versus self-funded health plans? Check out this infographic to see why more employers are choosing self-funded plans.

fully-insured versus self-funded health plans

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ACA Reporting Due Early 2017

ACA DeadlinesBy Michael Berwanger, JD, Director, Quality Management & Compliance

In early 2017, employers and insurance carriers must report information to employees and the IRS about coverage offered to employees under employer-sponsored health plans during calendar year 2016.

Background

The Patient Protection and Affordable Care Act (ACA) requires self-funded employers to satisfy two reporting obligations under Sections 6055 and 6056 of the Internal Revenue Code, relating to health coverage offered to employees and about those employees who are covered under the plan.

The purpose of the reporting obligations is to allow the IRS access to data needed to monitor compliance with both the employer and individual mandates. The reporting also may be used by affected employees in assessing their own compliance with the individual mandate and/or in seeking subsidized coverage on the federal and state exchanges established under the ACA (as described in this blog post).

Section 60ACA reporting55 Reporting Compliance

Under Section 6055 of the Internal Revenue Code, all self-funded employers must annually report information to the IRS and to any individual who is covered under a health plan offered by the employer.

Currently, many employers do not have access to Social Security numbers for non-employed dependents, creating a fairly significant compliance burden to collect that data. The regulations require that employers exercise “reasonable collection efforts” to obtain that information. (Typically, an employer will satisfy that standard by documenting at least two efforts to request the data from those individuals). This same information must be reported to employees, along with basic contact information for the employer.

Section 6056 Reporting Compliance

The second reporting obligation, under Code Section 6056, applies only to “Applicable Large Employers.” Applicable Large Employers are those employers with at least 50 full-time equivalent employees and to whom the ACA’s employer mandate applies.

Unlike Section 6055 reporting, all of this information also must be provided separately to each employee, full-time, part-time, or otherwise. You can read helpful IRS guidance about 6056 reporting here.

IRS Forms 1094 and 1095

The compliance obligations are complex, and the IRS has developed forms (Forms 1094-B, 1095-B, 1094-C, and 1095-C) to provide consistency in reporting and to help simplify the process for employers.

Applicable Large Employers (ALEs) who offer coverage under a self-funded health plan may use Form 1095-C, which combines the reporting obligations of Sections 6055 and 6056 in a single form for reporting to both the IRS and individuals. When the forms are provided to the IRS, the Applicable Large Employer also must submit a transmittal form, Form 1094-C. Forms 1095-C and 1094-C, along with instructions, can be accessed here.

Small employers with fewer than 50 full-time equivalent employees are only required to meet one of the reporting obligations, the Minimum Essential Coverage reporting under Section 6055. Small employers may use Form 1095-B, with transmittal Form 1094-B. These forms, along with instructions, can be accessed onACA reporting the IRS web site here.

Changes from reporting year 2015 to 2016 for forms 1094-C and 1095-C can be found here.

Changes from reporting year 2015 to 2016 for forms 1094-B and 1095-B can be found here.

Compliance Deadline

Filings will begin in early 2017 for the 2016 calendar year.

*Form 1095-C must be provided to all employees (full-time, part-time, or otherwise) by March 2, 2017.

*All Forms 1095-C, along with the transmittal form, 1094-C, must be provided to the IRS by February 28, 2017 (if in paper form), or March 31, 2017 (if filed electronically). 

Note: Employers filing more than 250 information returns (Form 1095-C) must do so electronically.MedCost

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2016 ACA Employer Deadlines Extended

2016 ACA Employer Deadlines

By Michael Berwanger, JD, Director, Quality Management & Compliance

The Internal Revenue Service (IRS) released Notice 2016-70, which extends the due date for furnishing to individuals the 2016 Form 1095-B (titled Health Coverage), and the 2016 Form 1095-C (titled Employer-Provided Health Insurance Offer and Coverage), from January 31, 2017 to March 2, 2017.

Self-funded employers should note that the filing deadlines remain unchanged. The Notice states that the “Treasury and the [Internal Revenue] Service have determined that there is no similar need for additional time for employers, insurers, and other providers of minimum essential coverage to file with the Service the 2016 Forms 1094-B, 1095-B, 1094-C, and 1095-C.”

Employer Deadlines

Therefore, the due dates for filing 2016 Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS remain:

February 28, 2017 (for paper filing)

March 31, 2017 (for e-filing)

Employers may obtain a 30-day extension for filing with the IRS by filing Form 8809 on or before the forms’ due date.

The IRS has also extended last year’s good-faith transition relief for inaccurate information on the forms. Recognizing the “challenges involved in developing new procedures and systems to accurately collect and report information in compliance with new reporting requirements,” the IRS has provided relief to incorrect and incomplete information reported on the statement or return.

Please note: The good-faith relief applies only to data on the forms, not failure to comply with due dates.MedCost

 

Got Employees? 5 Tips for a Smooth Open Enrollment

open enrollmentIt’s that time of the year that presents headaches for HR professionals and admin staff—open enrollment. But your company’s benefits administration doesn’t have to resemble a Halloween Fright Night. Here are five best practices to streamline your employees’ enrollment period and leave you with a basket of sweet candy:

1. Create a realistic schedule for open enrollment by beginning with the end in mind.

Your open enrollment period should end no later than 30 days prior to the end of your plan year or renewal date. Once you determine the ending date of open enrollment, back up from there to schedule open enrollment meetings, print forms or materials, distribute or mail open enrollment packets, etc.

2. Collect all required information for each plan participant (employee or dependent).

This may include information for each plan participant such as:

  •  Last Name, First Name and Middle Initial (exactly as provided in previous enrollments)
  •  Social Security Number (unique and accurate identifying information for each dependent)
  •  Address
  •  Date of Birth (unique and accurate identifying information for each dependent)
  •  Gender
  •  Hire Date (if an employee)
  •  Coverage Effective Date
  •  Product Coverage (Medical, Dental, Flex)
  •  Date of Termination, if applicable, and Reason for Term
       (especially needed for COBRA)
  •  E-mail address (useful to promote programs and services available through benefits plan)

3. Remind employees that “good data in equals good data out.”

open enrollmentStress the importance of completing all fields on any enrollment or waiver forms. It’s in every plan participant’s best interest to review and verify new and existing data during open enrollment since it directly affects coverage for the upcoming plan year. Decisions regarding participants’ eligibility and coverage under the health plan—as well as that of their dependents—are made based on the information provided during open enrollment.

4. Educate employees about the “not-so-flexible” guidelines of flexible spending accounts (FSAs), if available through your plan.

In addition to the advantages of flexible spending accounts, make sure your employees also know about the guidelines for FSAs. The most important thing for employees to remember is that FSAs are “use it or lose it” accounts. Contributions made to an FSA during a calendar year can be used only for eligible expenses incurred during the same year—unless your plan provides for either a grace period or a carryover. If your plan doesn’t provide for a carryover, employees need to be aware that any money remaining in an FSA account after the claim filing period at the end of the year (and after the grace period, if applicable) is forfeited in accordance with IRS regulations.

5. If your employees have flex debit cards, remind them to save all receipts for purchases made with the card.

open enrollmentSince a flex debit card deducts payment for an eligible health care expense directly from an FSA account, employees may think that saving health care receipts is unnecessary. Some claims for reimbursement, however, may require substantiation. Encourage employees to save all receipts for flex debit card purchases in case they receive a substantiation request or their tax return is audited by the IRS. Employees should hold on to their cards even if the allocated FSA total amount has already been used.

Our next blog will contain five more tips to plan and prepare for open enrollment like a pro. Subscribe to our blog to receive it automatically!*

 

*To sign up for the blog, go to the left margin under “STAY UP TO DATE.” The only requirement is your email address. 

 

It’s Time to Plan ACA Reinsurance Payments

By Michael Berwanger, JD, Director, Quality Management & Compliance

 

shutterstock_68891791It is time for employer-sponsored health plans to begin thinking about the process for calculation and submission of enrollment data and payment of fees under the Transitional Reinsurance Program.

As background, this program was established to fund a reinsurance pool to help stabilize premiums in the insurance markets created under the Affordable Care Act (ACA).

The program is being funded by three annual assessments on employer-sponsored health plans. The assessments are for average covered lives in 2014, 2015 and 2016 calendar years.

This year, enrollment data must be submitted by November 15, 2016, and payment must be submitted no later than January 17, 2017.

The 2016 Reinsurance Contribution Rate is $27.00 per covered life.

Online Submission Process

The Centers for Medicare and Medicaid Services (CMS) has implemented a streamlined process for reinsurancethe collection of reinsurance contributions. A contributing entity, or a Third Party Administrator (TPA) on its behalf, can complete all required steps for the reinsurance contributions process online (using the government portal, pay.gov), including registration, submission of annual enrollment count, and remittance of contributions.

A form is available for the contributing entity (or its TPA) to provide basic company and contact information and the annual enrollment count for the applicable year. The form will automatically calculate the contribution amounts, and entities will be required to submit payment information and schedule a payment date for remittance of the contributions.

CMS will not send an invoice to contributing entities. All required action will be completed online at pay.gov.

Options for Payment

There are two options for how a contributing entity can make a payment: (1) a one-time lump sum payment, or (2) a full contribution in two payments. (See chart below.)

Contribution Payment Options for the 2016 Benefit Year

Reinsurance

Source: Centers for Medicare and Medicaid Services

CMS will permit contributing entities to submit each year’s contribution in two separate payments – one larger payment of $21.60 per covered life at the start of the year, and a smaller payment of $5.40 per covered life at the end of the year.

However, when submitting enrollment data, dates must immediately be scheduled for payment of the fees, whether there will be one payment prior to January 17, 2017, or two payments with the later in November 2017.

If You Are Self-funded for a Portion of the Reporting Period

health insurance noticesFor a plan that has moved from a fully insured plan to a self-funded plan during the first nine months of the 2016 calendar year, both plans will be responsible for paying a portion of the fee, using one of the permitted calculation methods.

Since fully-insured plans are not permitted to use the Snapshot Factor Method of calculation, either the Actual Count Method or the Snapshot Method of calculation must be used.

Helpful Resources

This site provides technical assistance and training related to the Marketplace and Premium Stabilization program (which includes the Transitional Reinsurance Program). Webinars are offered that provide entities with information on program and operational guidance, along with live demos of the enrollment count and contributions submission process.

This is the site where the contributing entity, or TPA, will create a profile, and submit the enrollment data and contributions for the Transitional Reinsurance Program.

This website is hosted by the Centers for Medicare and Medicaid to provide information about the Transitional Reinsurance Program.

For more information, consult your broker, legal advisor or cms.gov. MedCost

This blog post should not be considered as legal advice.

 

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