At Sterling Benefits, we are proactively working with multiple resources to dissect the various facets of the law and to understand the guidelines and timelines it presents to our clients. You can expect that we will provide ongoing communications and information as interpretation and implementation details continue to unfold from the government.

Our priority at Sterling Benefits is to stay focused on delivering value and quality customer service to our customers as we work together with health care reform. Significant changes will take place in 2014. In the meantime, there are some items that will require attention much sooner. We will keep you posted as details and clarifications from the government are made available. We encourage you to review this information and utilize our office as a resource in addressing questions and concerns.

Wednesday, March 13, 2013

HRAs & PCORI Fees

As part of The Patient Protection and Affordable Care Act (PPACA) a new fee was introduced to be paid by health insurers and self-funded plan sponsors to fund the Patient-Centered Outcomes Research Institute (PCORI). The PCORI was established by the Act to promote the use of evidence-based medicine by disseminating comparative clinical effectiveness research findings. In mid December, the IRS released final regulations and guidance on the calculation and payment of the PCORI fees. Plans that are subject to the fee are:

  • Health reimbursement arrangements (HRAs)
  • Medical plans
  • Prescription drug plans
  • Self-insured dental or vision plans, if provided without a separate election or premium charge
  • Retiree only health plans (even though some are exempt from other PPACA mandates)
The fee will apply to plans that end after October 1, 2012 and before October 1, 2019. The fee is $2.00 ($1.00 for plan years ending before October 1, 2013) multiplied by the average number of lives covered under the plan/policy. For most insurers and self-insured health plan sponsors, the first payment of the fee will be due July 31, 2013. You are responsible to handle the filing and payment of the fees...not the TPA.
 
Calculating the “Average Number of Lives Covered”
  • Actual Count Method: The sum of lives covered for each day of the plan year, divided by the number of days in the plan year
  • Snapshot Method: In general, the sum of the total of lives covered on a date during the first, second or third month of each quarter of the plan year divided by the number of dates on which a count was made
  • Form 5500 Method: The number of participants, reported on the Form 5500 (the number of participants covered on the HRA plan on the first day of the plan year)
Plan sponsors with calendar-year plans must remit the PCORI fees applicable for the 2012 plan year by July 31, 2013. The Regulations indicate that the reporting and payment of PCORI fees cannot be delegated to a third party (such as BASIC). The fees should be reported on Form 720 (Quarterly Federal Exercise Tax Return Form).

Additional PCORI References
http://www.pcori.org/how-were-funded/
http://www.gpo.gov/fdsys/pkg/FR-2012-12-06/pdf/2012-29325.pdf
http://www.irs.gov/pub/irs-drop/n-11-35.pdf
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