Reform Q&A

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Original Question:

I have a quick clarification regarding the Patient Centered Outcomes Research Institute Fee or PCORI for short. 

This fee is assessed at the end of July. In 2014, the fee will be $2 per covered life for each plan or policy year ending on or after 10/1/2013, and ending on or before 9/30/2014. Fully insured plans cover this cost and ‘bake’ the cost into rates; the plan sponsor of self-funded plans must file and pay for this fee directly.

On 1/1/2014 we moved one of our clients, Genpro from Horizon (Fully Insured) to Cigna (Self-Insured). Our line of thinking, in accords with Cigna as well, is that Horizon will be responsible for the full amount, since the policy ended with Horizon in the window noted above.

Can you comment on our rationale? Can you confirm or deny we are correct in our assumption?

Answer:


You are correct in your assumption.  The fee will be funded by the health insurer.  For self-funded, the plan sponsor must pay and report the fee on IRS Form 720, Quarterly Federal Excise Tax Return.  The fee is due once a year, which will be due by July 31 of each year.  The payment and return will cover the plan year that ended during the preceding calendar year.  For example:

Self-Funded or HRA Plan Year PCORI Fees Due July 31, 2013 at $1 per Average Covered Life:

  • November 1, 2011 – October 31, 2012
  • December 1, 2011 – November 30, 2012
  • January 1, 2012 – December 31, 2012

Self-Funded or HRA Plan Year PCORI Fees Due July 31, 2014 at $1 per Average Covered Life:

  • February 1, 2012 – January 31, 2013
  • March 1, 2012 – February 28, 2013
  • April 1, 2012 – March 31, 2013
  • May 1, 2012 – April 30, 2013
  • June 1, 2012 – May 31, 2013
  • July 1, 2012 – June 30, 2013
  • August 1, 2012 – July 31, 2013
  • September 1, 2012 – August 31, 2013
  • October 1, 2012 – September 30, 2013

Self-Funded or HRA Plan Year PCORI Fees Due July 31, 2014 at $2 per Average Covered Life:

  • November 1, 2012 – October 31, 2013
  • December 1, 2012 – November 30, 2013
  • January 1, 2013 – December 31, 2013

Self-Funded or HRA Plan Year PCORI Fees Due July 31, 2015 at $2 per Average Covered Life:

  • February 1, 2013 – January 31, 2014
  • March 1, 2013 – February 28, 2014
  • April 1, 2013 – March 31, 2014
  • May 1, 2013 – April 30, 2014
  • June 1, 2013 – May 31, 2014
  • July 1, 2013 – June 30, 2014
  • August 1, 2013 – July 31, 2014
  • September 1, 2013 – August 31, 2014
  • October 1, 2013 – September 30, 2014

Therefore, the group will have July 31, 2014 PCORI paid by the carrier for plan year ending December 31, 2013 @$2.00 per average covered life.  This group will personally be liable for the fee on July 31, 2015 for this new self-funded plan year January 1, 2014 ending December 31, 2014. 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

  1. Qualifying for Medicaid would normally not trigger any penalties under the Affordable Care Act (ACA) because they are not getting a subsidy.
  2. A person would have to go to the marketplace/exchange as soon as they lose their coverage.  Voluntarily ending coverage does not qualify for a Special Enrollment Period.   However, according to DOL FAQs  - Note: If you currently have COBRA coverage, you can switch to coverage through a Health Insurance Marketplace plan between now and July 1, 2014.  If interested, call the Marketplace Call Center at 1.800.318.2596 and tell them that you're calling about your COBRA benefits.  After you've been approved for a Special Enrollment Period, you can apply for and enroll in a Marketplace plan.

 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

According to Healthcare.gov, a small group may use SHOP through the Marketplace to change their coverage.  Please be aware of what Aetna allows to terminate their policy.

 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

The mandate only applies to full-time employees (those working 30 hours or more per week). Part-time employees do not have to be offered insurance unless they become full-time employees.

 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

These tools are available to help your broker - 

allCheckTM Pro is our powerful new Pay-or-Play calculator that organizes your payroll data to determine Health Care Reform compliance. Simple, fast and secure, it allows you to create a variety of scenarios to arrive at the best approach for each client. With these insights in hand, your clients can develop a compliance strategy that will minimize the impact of Health Care Reform on their business.

http://pages.benefitmall.com/rs/benefitmall/images/allCheckProTips.pdf

In addition, BenefitMall’s allCheck™  is also available. 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

The answer to your question is no, the 90-day waiting period was not delayed.  The regulations, shown in the Federal Register attached to your email, finalized amendments to the existing regulations to conform to the Affordable Care Act provisions.  Those changes are to be effective 1.1.15, not the waiting period.  

 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

The employer shared responsibility mandate is generally effective on January 1, 2015.  However, transition rules apply that may delay the assessment of penalties until the first day of your first plan year that starts on or after January 1, 2015.  The transition rules say that if 1) you maintained a non-calendar year plan as of December 27, 2012; 2) your plan year was not modified after December 27, 2012 to begin at a later calendar date; 3) at least 95% (70% if certain criteria as described above are met) of your full-time employees are offered coverage no later than that first day of the plan year that starts in 2015; and 4) your employees would not be eligible for coverage under any other of your group health plans that has a calendar year plan year, penalties will not be assessed for the months prior to the first day of the plan year that starts in 2015 for:

  1. Any employee (whenever hired) that would be eligible for coverage, as of the first day of the first plan year that begins in 2015 under the eligibility terms of the plan as in effect on February 9, 2014; and
  2. Any other employees that are not eligible under the terms of the plan in effect on February 9, 2014 if:
  1. your non-calendar year plan covered at least one quarter of your employees (full-time and part-time) as of any date in the 12 months ending on February 9, 2014 or your plan offered coverage to at least one third of your employees (full-time and part-time) during the open enrollment period that ended most recently before February 9, 2014; OR
  2. your non-calendar year plan covered at least one third of your full-time employees as of any date in the 12 months ending on February 9, 2014 or your plan offered coverage to one half or more of your full-time employees during the open enrollment period that ended most recently before February 9, 2014.

Therefore, if the four criteria described above are met, for any of your employees who are eligible to participate in the plan under its terms as of February 9, 2014 (whether or not they take the coverage), you will not be subject to a penalty for those employees until July 1, 2015 if they are offered affordable coverage that provides minimum value no later than July 1, 2015.

For any other of your employees that were not eligible to participate under the terms of the plan in effect on February 9, 2014, you can avoid liability for a penalty for those non-eligible employees until July 1, 2015 if they are offered affordable, minimum value coverage on July 1, 2015 and:

  1. Your plan covered at least one quarter of all your full-time and part-time employees as of any date in the 12 months ending on February 9, 2014 or offered coverage under your non-calendar year plan to at least one third of your full-time and part-time employees during the open enrollment period for your July 1, 2013 renewal; OR
  2. Your plan covered at least one third of your full-time employees as of any date in the 12 months ending on February 9, 2014 or offered coverage to one half or more of your full-time employees during the open enrollment period for your July 1, 2013 renewal.

The good news, if all works out well and the final statistics for the group remains the same, the group may not face a penalty.  Since 50 employees are not participating minus 80 eliminates the $2,000 penalty.  As long as the plan is affordable and meets Minimum Value (MV) of 60%, the group will not be exposed to the $3,000 penalty per employee eligible for a subsidy. 

 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

 

Hourly employees - calculate actual hours of service and hours for which payment is made or due for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. 

Non-hourly employees - there are three methods permitted, shown below, to calculate the number of hours of service. You may apply different methods for different classifications of non-hourly employees, so long as the classifications are reasonable and consistently applied.

  1. Counting actual hours of service (as in the case of hourly employees) and hours for which payment is made or due for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence; or 
  2. Using a days-worked equivalency method whereby the employee is credited with eight hours of service for each day, the employee is credited with at least one hour of service (including hours of service for which no services were performed); or 
  3. Using a weeks-worked equivalency of 40 hours of service per week for each week, the employee is credited with at least one hour of service (including hours of service for which no services were performed). 

However, you cannot use the days-worked or weeks-worked equivalency method if the result would be to substantially understate an employee's hours of service (i.e. employees working three 10-hour days). 

 

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

The rule was supposed to apply for plan years beginning on or after September 23, 2010.  However, on December 22, 2010, the IRS and Departments of Labor and Health and Human Services announced that compliance with the new nondiscrimination provision will not be required (and thus, any sanctions for failure to comply will not apply) until after regulations or other administrative guidance has been issued. In order to provide insured group health plan sponsors time to implement any changes required as a result of any regulations or other guidance, the Departments anticipate that the future guidance will not apply until plan years beginning a specified period after issuance of the regulations.

There are no laws requiring plans to provide the same benefit coverage to all employees. Generally, employers have discretion when structuring their benefits plans and are able to make distinctions among employee populations regarding access and the level of benefits offered. The key is to make sure that benefits plan decisions are nondiscriminatory, keeping in mind the adverse impact on protected groups and any unintentional discrimination that may result from those decisions. 

The Health Insurance Portability Accountability Act (HIPAA) makes it illegal to assess health insurance premiums based on health factors. It is not permissible to charge some employees more than any other similarly situated individuals based on medical conditions, claims experience, receipt of health care services, genetic information or disability. HIPAA does allow an employer to make distinctions in benefits that are offered and in the cost of benefits when those distinctions are not discriminatory.  

Plans may differ among employees only on “bona fide employment-based classifications” consistent with the employer’s usual business practice:

Employee Work Classifications/Categories and Benefit Eligibility 

The company has a policy of maintaining appropriate classifications of employees to make sure that all legal requirements are maintained so that there is no discrimination in terms of benefit plan eligibility and payment of compensation in accordance with federal and state laws. The purpose of this procedure is to define the company’s employee classifications for benefit plan eligibility. For questions regarding classification of employees for purposes of wage laws, please refer to “Employee Classification Procedures: Wages and Overtime Compensation.”

Human Resources will classify employees in accordance with the following procedures to ensure that all appropriate employees are offered the appropriate benefit enrollment opportunities. 

Operating department managers are responsible for advising Human Resources and requesting changes in status as well as extensions in employment situations where specified periods are being exceeded. 

Employee Work Classifications 

Full-time Classifications 

Temporary (TFT)—Employed on a regularly scheduled basis of at least 40 hour per workweek for a period not to exceed 90 days. A TFT employee may be continued in this class for one additional 90-day extension period upon request of the operating manager of the department with the concurrence of Human Resources. After the 180-day period, the employee will either be converted to regular status or released. 

Regular (RFT)—Employed on a regularly scheduled 40-hour basis for a nonspecified period. 

Benefit Plan Participation—RFT employees are eligible to participate in all benefit plans the company offers once eligibility requirements have been met. TFT employees are eligible to participate in the company’s defined contribution plan once the employee has completed 1,000 hours of service. TFT employees will receive holiday pay prorated according to their scheduled hours for the workweek in question. 

Part-time Classifications 

Temporary (TPT)—Employed on a regularly scheduled basis which is less than full time but equals or exceeds 20 hours per week for a period not to exceed 90 days. A TPT employee may be continued in this class for one additional 90-day extension period upon request of the operating manager of the department with the concurrence of Human Resources. After the 180-day period, the employee will either be converted to regular part-time status or released. 

Regular (RPT)—Employed on a regularly scheduled basis which is less than 40 hours per workweek but equals or exceeds 20 hours per week for a nonspecified period. 

Benefit Plan Participation—RPT employees are eligible to participate in all benefit plans the company offers once eligibility requirements have been met. However, all leave accrual programs and holiday pay will be provided to regular part-time employees on a pro rata basis in accordance with the employee’s regularly scheduled hours for the workweek in question. Temporary part-time employees will receive pro rata holiday pay in accordance with the employee’s regularly scheduled hours for the workweek in question. 

Part-time Excluding Benefits 

Temporary (TEB)—Employed on a regularly or nonregularly scheduled basis of less than 20 hours per week for a period not to exceed 90 days. Employees in this class are not eligible for any company benefit plans nor may their employment be extended. 

Regular (REB)—Employed on a regularly scheduled basis of less than 20 hours per week for a nonspecified period. Employees in this class may participate in the defined contribution plan if the employee completes 1,000 hours per year. REB employees will receive pro rata holiday pay. 

Special Classes 

On-call Employee (OCE)—Employed on an “as-needed” basis for a nonspecified period. Employment in this class will be re-evaluated no less than every 180 days to determine if the employment relationship will be continued. After the first 180 days, the operating department manager must request a continuation and provide supporting documentation and receive the concurrence of Human Resources for the employment relationship to continue. 

Benefit Plan Participation—OCE personnel are not eligible to participate in any company benefit plan and may not be employed for more than 400 hours in any 180-day period. 

Interns (INT)—Performing work in a special status for a specified period, i.e., summer, academic semester. 

Benefit Plan Participation—INT personnel are ineligible for participation in company benefit plans.

The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall.  This response, to the best of our knowledge is provided for informational purposes.  Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.