House bill would change PPACA definition of full-time employee
Originally posted by Jerry Geisel on https://www.businessinsurance.com
Legislation introduced in the House of Representatives last Friday would ease the health care reform law's definition of a full-time employee, shielding more employers from a stiff financial penalty imposed by the law.
Under the Patient Protection and Affordable Care Act, employers are required effective in 2014 to offer qualified coverage to full-time employees — defined as those working an average of 30 hours per week — or be liable for a $2,000 penalty per employee.
The legislation, H.R. 2575, introduced by Rep. Todd Young, R-Ind., would change the definition of full-time employees to those working an average of 40 hours per week.
Repealing the 30-hour definition of a full-time employee “and restoring it to the historical norm ensures this bill not only protects working poor and middle class employees, it also ensures that laws governing employment are consistent,” Rep. Young said in a statement.
The introduction of the measure comes one year to the day of the 2012 U.S. Supreme Court ruling upholding the constitutionality of the health care reform law provision requiring most Americans to enroll in a health care plan or pay a tax, effective Jan. 1, 2014.
SHRM Research Spotlights Health Care Reform Strategies
Originally posted by Stephen Miller on the SHRM website.
New survey reports detailing how U.S. employers are responding to health care reform were released by the Society for Human Resource Management on June 16, 2013, in conjunction with its Annual Conference & Exposition.
Part one, Health Care Reform—Challenges and Strategies, examines the difficulties that HR professionals are facing and the strategies they are using to handle the new regulations. Part two, Health Care Reform—Impact of Health Care Coverage and Costs, focuses on future health care coverage benefits and expected costs.
In addition, a two-page summary of the survey findings is presented in SHRM Research Spotlight: Health Care Reform—Challenges and Costs.
The research was conducted in May 2013, using a randomly selected sample of SHRM members. The Society received 818 responses, half from members with the job function of benefits and compensation and half with the job title of HR manager or higher.
Increased Costs, Cost-Sharing Expected
A large majority of those surveyed (84 percent) expect their health care coverage costs to increase in 2014. Among these respondents, more than half (55 percent) predicted an increase of up to 10 percent, 19 percent forecast a 10 percent to 15 percent increase, and one-quarter (26 percent) expected an increase of 16 percent or more. Generally, small organizations expect greater jumps in costs.
Most responding organizations (83 percent) are likely or highly likely to pass on higher costs to their employees.
When asked what actions their companies are taking as a result of the Patient Protection and Affordable Care Act (PPACA), respondents mentioned the following:
- HR staff education. Nearly three-quarters of organizations are educating HR staff members through classes (74 percent) or working with legal/benefits counsel (73 percent) to help them understand the health care law.
- Redesigned plans. More than one-half are working with their benefits provider to design a compliant health care plan for 2014 (61 percent) or analyzing the short-term financial impact of the law (60 percent).
- Alternative plan options. More than one-half (56 percent) already offer (37 percent) or plan to offer (19 percent) their employees alternative, lower-premium coverage, including high-deductible plans with health savings accounts or health reimbursement arrangements.
- Self-insurance. Just over half of organizations (52 percent) have fully insured medical benefits. Larger businesses are more likely to be self-insured, as are publicly owned, for-profit companies.
- Spousal coverage. Thirteen percent of organizations have provisions to limit coverage for employees' working spouses, such as applying surcharges or exclusions, and 9 percent plan to implement them in 2014.
- Grandfathered status. About one-quarter (26 percent) indicated they will try to keep a grandfathered health plan, which is exempt from certain PPACA provisions. Fifty-five percent will not maintain grandfathered status, and 19 percent are unsure.
- Staff and hour reductions. Few organizations (3 percent) have reduced or plan to reduce their staff. However, 9 percent have already limited part-time workers to less than 30 hours per week, and another 12 percent plan to do so.
- Resources. To help them comply with reform provisions, employers are turning to their insurance brokers (78 percent), SHRM resources (62 percent), legal counsel (48 percent), consultants (34 percent) and internal experts (20 percent).
Employers up estimated costs of health care reform law
Original article from https://www.businessinsurance.com
By Jerry Geisel
Employers are upping their estimates of how much the health care reform law will increase costs, according to a Mercer L.L.C. survey released June 12.
Two years ago, 25% of employers thought that complying with the Patient Protection and Affordable Care Act would increase their health care plan costs by less than 1%. But now, just 9% of nearly 900 employers surveyed by Mercer expect a cost increase that small.
Similarly, 15% of employers in 2011 expected the health care reform law to increase costs by at least 5%. Now, 19% of employers expect cost increases of at least 5%. In addition, 21% are projecting 2014 health care reform law related cost increases of 1% to 2%, while 18% expect cost increases of 3% to 4%; 32% of respondents said they didn't know the cost impact.
Mercer executives said there are several reasons why more employers are increasing their cost estimates.
“As employers get closer to implementation, they have a better idea of how many additional employees will become eligible for coverage. Some that thought they would cut hours have changed their position on that,” Beth Umland, Mercer's director of research for health and benefits in New York, said in an email.
Under PPACA, employers will be liable for a $2,000-per-employee penalty if they do not provide coverage starting next year to full-time employees, or those working an average of 30 hours a week.
In addition, Ms. Umland said, some employers in 2011 didn't know about the various fees that the health care reform law imposes. For example, employers will have to pay a fee of $63 per health care plan participant in 2014 to fund a program that will partially reimburse health insurers for providing coverage to high-cost individuals. While there was some awareness of the Transitional Reinsurance Program, it wasn't until last year that regulators announced the size of the fee employers would have to pay.
Check out our HCR Central for FREE PPACA Downloads, FAQ's, and compliance news to help you and your company prepare for PPACA requirements that take effect later this year and in 2014.
Health Care Law Remains Deeply Divisive
Original article from https://triblive.com
By Dayton Daily News
David Peabody is apprehensive about the new health care law. Ericka Haverkos is hopeful about it.
These Ohio residents — one the owner of a small landscaping business in Columbus and the other a college student who works part time as a cashier — are emblematic of millions of Americans who next year will have to adapt to the most sweeping changes in the delivery of health care since the establishment of Medicare and Medicaid in 1965.
To Peabody, the law will impose steep costs on his company and force him to decide whether to insure his 65 workers or pay a fine to the federal government. To Haverkos, who says she has a learning disability, it could mean access to a doctor who could prescribe the medication she needs.
All across the nation, millions of people are facing the reality of a new era in health care. Signed into law in 2010 by President Obama and known as the Affordable Care Act, the law will extend health care coverage to more than 20 million of the 47 million Americans without insurance.
“For people who haven't been able to find affordable insurance, they are going to love it,” said Elise Gould, a health insurance analyst at the Economic Policy Institute, a left-leaning nonprofit organization in Washington.
The law's critics contend it's going to frustrate Americans with its complexities, new regulations and blizzard of fees and taxes that they claim will deal a major blow to a fragile economy still recovering from the 2008 financial crash.
When asked to describe how efficiently the law is being implemented, Thomas Miller, a health policy analyst at the conservative oriented American Enterprise Institute in Washington joked: “Coming along just fine. Steady as she goes right into the cliff. Don't mind that iceberg. The Titanic got past it.”
A Kaiser Family Foundation survey in April found that 49 percent of Americans lack the information to understand how the law works. More alarming to the Obama administration, a recent Wall Street Journal/NBC News poll showed that 49 percent of Americans believe the law is a bad idea while just 37 percent call it a good one.
The law extends coverage in two ways. It expands the eligibility for Medicaid, which provides health coverage to low-income people. For those making too much money to qualify for Medicaid, the law offers federal subsidies for families of four earning $33,000 to $94,000 a year so that they can buy their plans through exchanges operated by the federal government or their state.
“I do believe folks underestimated the enormity of this law,” said Kevin Kuhlman, a Washington lobbyist for the National Federation of Independent Businesses. “In order for it to be a success, not only does the government have a massive project ahead of it managing and operating these exchanges, but private businesses also will have to come along and make a lot of drastic changes.”
Haverkos, a student at the Columbus College of Art and Design, said she lost her health insurance more than two years ago when her mother's term on the state Board of Education ended. The health law lets adult children remain on their parents' health plan until age 26, but Haverkos said that's not an option for her.
She said her employer doesn't offer insurance to part-time employees like her. She said she has emergency coverage through the college. Under the law, her insurance through the college will be upgraded if she remains enrolled there.
Supporters of the health care law say people like Haverkos can get access to coverage because government subsidies make the coverage more affordable. Comprehensive coverage would help relieve the symptoms of her persistent allergies and, she said, give her security - a sense of comfort knowing that it's there.”
For some people, the subsidies would amount to considerable savings. According to the Kaiser Family Foundation, a single 45-year-old earning $28,735 a year would pay $5,733 a year in premiums under a typical plan. Using the ACA's graduated scale, which calls for more subsidies for lower-income people, that person would have $3,420 of the premium paid for by the government.
“Those people who have found it very difficult to have access to coverage will find it a good deal,” said Kenneth Thorpe, a one-time senior health official under former President Bill Clinton.
Others are scrambling to determine what the law will cost them.
Many small companies that have not been offering insurance will have to under the new law. That will force some into a choice between providing insurance for their workers or paying thousands of dollars in federal taxes.
The ACA will require a company with 50 or more full-time workers to provide insurance or pay a $2,000 per-person fine for every uninsured worker. The only exception is the first 30 workers in the company are excluded from the fine.
Peabody, who years ago took pride in covering the entire cost of his employees' health coverage, said he now has to calculate what he can afford.
Last year, his company paid $48,000 of the $119,000 in premiums charged by his insurer, with the workers picking up the rest.
Not all of his workers accept the company-provided insurance, Peabody said.
“A lot of people can't afford health insurance,” he said. “That's why they choose not to take it.”
Other businesses are facing similar choices. Jamie Richardson, vice president of White Castle, which has 406 hamburger shops across the country, said his company spent $36 million last year on health coverage for its 5,000 full-time workers. All told, the chain employs about 10,000 people.
Under the new law, White Castle must offer its full-time workers (or anyone working 30 hours or more a week) insurance within 90 days of their hire date. That's a change from current White Castle policy, which offers health insurance to workers six months after they are hired. The company could reduce the number of hours for some workers — as a few companies have said they would do — but the chain said it does not want to do that.
“If someone's full time, we want them to stay full time,” Richardson said. “We don't want people to lose benefits.” He did say the additional costs could mean fewer people are hired.
Opponents argue that adding 20 million into the health care system along with requirements for minimum federal coverage is likely to cause premiums to rise for everyone insured in the United States. By contrast, supporters say the new law will restrain the growth rate of health care because insured people will not be flooding emergency rooms for care.
Jennifer Tolbert, director of state health reform for the Kaiser Family Foundation, said the true costs of the new law will be difficult to calculate.
“For most people with employer-sponsored coverage, the cost of that coverage has been increasing over the past decade,” she said. Determining how much of those costs are due to general trends as opposed to the new law will be “hard to disentangle.”
HHS Issues Final Rule on SHOP Exchange Program
This content was originally published on the IFEBP.org website.
The Department of Health and Human Services (HHS) released a final rule implementing Affordable Care Act provisions relating to the Small Business Health Options Program (SHOP). This rule finalizes the amendments in the proposed rule of March 11, 2013, regarding triggering events and special enrollment periods. It implements a transitional policy regarding employees' choice of qualified health plans (QHPs) in the SHOP.
- The final rule changes the special enrollment period from 60 days to 30 days in most instances.
- If an employee or dependent becomes eligible for premium assistance under CHIP or loses eligibility for Medicaid or CHIP, the employee or dependent would have a 60-day special enrollment period to select a Qualified Health Plan.
- There is a transitional rule regarding what QHPs an employer may choose to offer.
The regulations are effective July 1, 2013.
HHS also published a
The Hundred Years’ War for Healthcare Reform
Original article from https://inthesetimes.com
By A.W. Gaffney
The story of healthcare reform in the United states begins not with Obama, Clinton or even Johnson, but almost a century ago, in the years leading up to World War I. Although the Socialist Party of America had called for insurance for workers “against accident, sickness and lack of employment” as early as 1904, it wasn’t until 1912, when the platform of Theodore Roosevelt’s Progressive Party called for a system of health insurance, that it emerged as a major political issue. Roosevelt lost the election, but progressives were nonetheless optimistic that healthcare legislation could be passed at the state level, and in 1916, progressive state legislators submitted “compulsory” health insurance bills to the legislatures of New York, Massachusetts and New Jersey. Much like the “employer mandate” of the Affordable Care Act, these plans would have required industrial employers to contribute to medical coverage and sick pay for workers and their families.
These were bold ideas, but they met with unfortunate timing, as two developments in Europe furnished powerful ideological weapons to those who opposed the legislation: in April 1917, the United states entered the war against Germany, and the following October, the Bolsheviks seized power in Moscow.
These global events proved politically useful to physicians in the American Medical Association (AMA), who had come to see health insurance legislation as a threat to both their independence and income. The AMA could now paint state-based health insurance as both pro-German (given its roots in Otto von Bismarck’s 19th-century social insurance) and pro-Bolshevik. Though the former claim had far more basis in fact, the latter smear was to prove the more enduring—throughout the healthcare reform debate of 2009-2010, even the most moderate of reform proposals were lambasted as communist by the Right. The effect in 1918 was a turning of the tide against the promising state plans that ended in their total defeat and decades of inaction.
For the next 90-odd years, efforts at sweeping healthcare reform in the United States were a series of failures. New Dealers picked up healthcare reform again in the 1930s, seeking to weave it into the new social safety net. However, fear of the physician lobby—which had flexed its newfound political muscle so effectively in the state-based campaigns of 1916-1918—encouraged Franklin D. Roosevelt to leave health insurance out of his landmark Social Security Act. Still, over time, Roosevelt leaned toward a system of universal healthcare, arguing in his famous 1944 “Second Bill of Rights” State of the Union Address for the “right to adequate medical care and the opportunity to achieve and enjoy good health.”
Though Roosevelt died the following year, the New Deal conception of universal healthcare lived on in the series of “Wagner-Murray-Dingell” (WMD) health bills of the Truman years. In its 1945 version, the WMD bill would have established universal national health insurance based on the European model. The AMA, still opposed to reform, again won the old-fashioned way, by red-baiting WMD to its grave.
Branding the bill with the hammer and sickle turned the fight over universal healthcare into yet another front of the developing Cold War, so much so that when the Johnson administration again sought to remake American healthcare in the 1960s, it strategically pursued reforms only for those individuals who were the least able to afford medical care and therefore the most politically inoffensive: the poor and the elderly. Thus Medicare and Medicaid were born.
Subsequent decades saw a number of universal healthcare proposals crash and burn: Ted Kennedy’s “health security” plan in 1970, Nixon’s plan in 1974, and Clinton’s in 1993.
This series of missteps and lost opportunities gives a sense of the stakes when the healthcare debate again took center stage after the election of Obama in 2008. But Obama also had to contend with a corporate healthcare industry that had grown enormously in power and influence in the hundred years between the WWI-era campaigns and his first term. Indeed, the relatively crude public relations campaign of the AMA in the 1910s was nothing compared to the massive lobbying machines of the insurance and pharmaceutical industries in the 21st century. These corporate “stakeholders” were to critically influence the terms of the healthcare reform debate of 2009-2010.
For instance, the health insurance lobby agreed to support the elimination of “pre-existing” conditions in exchange for a number of industry-favorable provisions, such as an individual mandate. Similarly, the pharmaceutical lobby agreed to support reform legislation so long as it did not allow Medicare to negotiate directly with pharmaceutical companies over drug prices, areform that by one estimate could have saved the government between $230 billion and $541 billion over ten years. And there’s no doubt that industry influences limited reform in other, less obvious ways, whether it was the early exclusion a single-payer system or the elimination of a “public option” from the final bill.
But clearly, these various, intertwined historical dynamics—stretching back 100 years—contributed crucially to the final form of the landmark legislation that lay upon Obama’s desk on March 23, 2010.
With a $2,000 deductible Is the Affordable Care Act 'affordable'?
Original article from https://money.cnn.com
By Tami Luhby
Until now, much of the debate swirling around the Affordable Care Act has focused on the cost of premiums in the state-based health insurance exchanges. But what will enrollees actually get for that monthly charge?
States are starting to roll out details about the exchanges, providing a look at just how affordable coverage under the Affordable Care Act will be. Some potential participants may be surprised at the figures: $2,000 deductibles, $45 primary care visit co-pays, and $250 emergency room tabs.
Those are just some of the charges enrollees will incur in a silver-level plan in California, which recently unveiled an overview of the benefits and charges associated with its exchange. That's on top of the $321 average monthly premium.
For some, this will be great news since it will allow them to see the doctor without breaking the bank. But others may not want to shell out a few thousand bucks in addition to a monthly premium.
"The hardest question is will it be a good deal and will consumers be able to afford it," said Marian Mulkey, director of the health reform initiative at the California Healthcare Foundation. "The jury is still out. It depends on their circumstances."
A quick refresher on Obamacare: People who don't have affordable health insurance through their employers will be able to sign up for coverage through state-based exchanges. Enrollment is set to begin in October, with coverage taking effect in January. You must have some form of coverage next year, or you will face annual penalties of $95 or 1% of family income (whichever is greater) initially and more in subsequent years.
Each state will offer four levels of coverage: platinum, gold, silver and bronze. Platinum plans come with the highest premiums, but lowest out-of-pocket expenses, while bronze plans carry lower monthly charges but require more cost-sharing. Gold and silver fall in the middle.
The federal government will offer premium subsidies to those with incomes of up to four times the federal poverty level. This year, that's $45,960 for an individual or $94,200 for a family of four. There will be additional help to cover out-of-pocket expenses for those earning less than 250% of the poverty line: $28,725 for a single person and $58,875 for a family of four. The subsidies are tied to the cost of the state's silver level plans.
Related: I'm signing up for Obamacare
California offers insight into how much participants will actually have to pay under Obamacare. The state, unlike most others, is requiring insurers to offer a standard set of benefits and charges in each plan level. The only variables are monthly premiums, doctor networks and carriers in your area.
For those in need of frequent medical care, the platinum or gold plans would reduce out-of-pocket costs for treatment. These plans have no deductible, and doctors' visits and medication are cheaper. But the trade-off is that they have higher monthly premiums. California has not yet released the premium range for these tiers.
On the flip side, a young man who never visits the doctor and wants to minimize his monthly charge could opt for a bronze plan. A 40-year-old enrolling in this plan could pay as little as $219 a month. But, if he did get sick, he'd get socked with a $5,000 deductible, $60 co-pays for primary care visits and a $300 emergency room charge.
The Patient Protection and Affordable Care Act provides protection for those who need a lot of care by placing a cap on out-of-pocket expenses. The maximum a person in an individual platinum plan will spend a year is $4,000, while those in the other tiers will shell out no more than $6,400.
"Insurance is expensive. It's hard for anyone who isn't well off to afford it," said Gary Claxton, director of the health care marketplace project at the Kaiser Family Foundation. "But it is good enough that you can afford to get sick without bankrupting yourself."
Whether potential enrollees find these plans affordable will depend on how healthy they are and whether they are currently insured.
Many individual insurance offerings currently available come with much higher deductibles, cover fewer expenses and limits on how much they'll pay out in a year. Plans on the exchange, on the other hand, are required to cover a variety of "essential benefits," including maternity care, mental health services and medication.
"In many cases, depending on the plan, the coverage will be more comprehensive than what the enrollee currently has," said Anne Gonzalez, a spokeswoman with Covered California, which is running the state's exchange.
Large employers won't cut worker hours due to PPACA
Original article from https://www.businessinsurance.com
By Jerry Geisel
Nearly all large employers are not considering reducing the number of hours employees work in response to the health care reform law, according to a survey released Thursday.
Ninety-eight percent of employers surveyed by Towers Watson & Co. said they have not and are not considering asking full-time employees to move to part-time status due to the Patient Protection and Affordable Care Act.
Under the health care reform law, employers must extend coverage to employees working at least 30 hours a week starting next year or pay a $2,000 penalty for each full-time employee.
The threat of the penalty has led to numerous predictions that some employers would reduce hours of employees now working at least 30 hours per week who are not offered health care plan coverage to avoid the penalty in the future.
But few employers appear willing to take such action.
“It's clear that most employers are hesitant to rush and implement changes that will negatively affect workers,” Laura Sejen, New York-based global head of rewards for Towers Watson, said in a statement.
In fact, some employers are easing health care plan eligibility requirements. Earlier this week, for example, Cumberland Gulf Group of Framingham, Mass., said employees working as few as 32 hours a week will be eligible for group coverage effective Oct. 1, down from the current 40-hour-a-week requirement.
The Towers Watson survey is based on the responses of 113 employers, all of which have at least 1,000 employees.
Weight Watchers for business: What former executive knows about corporate wellness
Original article from https://www.bizjournals.com
By Brianne Pfannenstiel
Romy Carlson knows as well as anyone that getting corporate America on board with office weight loss programs is almost as challenging as actually losing weight.
The former Weight Watchers executive just signed on with corporate wellness company Retrofit as vice president of business development.
She'll be based here in Kansas City and will oversee the development and acquisition of new business. With about 17 years of experience in the field of corporate wellness, she said she knows that getting busy executives to commit to office weight loss or wellness programs comes with a unique set of challenges.
"It's an interesting arena because at first you would think that maybe people are just scared of it, maybe executives are nervous because they don't necessarily manage their own health so how do they push it out to their employees?" Carlson said.
Male CEOs are actually more likely to be overweight than men within the general population, according to one study from Michigan State University.
The study showed that between 45 and 61 percent of top male CEOs are overweight, and between 5 and 22 percent of top female CEOs are overweight.
"So far there really hasn't been a great technology-based program that serves the busy professional," Carlson said.
That's one reason she got on board at Retrofit — it's Weight Watchers, in a sense, tailored specifically for professionals in the workplace.
Companies sign up to partner with Retrofit and can subsidize membership fees for its employees. Retrofit then sends each participant a wireless activity tracker and a wireless scale, both of which automatically upload the data to a team of Retrofit professionals who meet individually with the employees to discuss personalized wellness programs.
IRS Issues Final Rule on Comparative Evidence PCORI Fees
This content was originally published by Stephen Miller on the SHRM website.
Fees, due by July 31, will be charged to health care insurers, and to sponsors of self-insured health plans, to fund the new Patient-Centered Outcomes Research Institute (PCORI)
Revised Form 720 Issued
For sponsors of self-insured health plans, the IRS posted an updated Form 720 and accompanying instructions on its website. The new Form 720 (with a revision date of April 2013), along with related payment voucher Form 720-V, should be used to report and remit the "PCORI fee" to the IRS. Although the Form 720 is designed for quarterly payments of certain excise taxes, the PCORI fee is paid only annually.
The fee, as described below, is required to be reported annually on the second quarter Form 720 and paid by its due date, July 31, with the first fee payment due July 31, 2013.
PCORI Fee Is Deductible
In another development, the PCORI fee is an “ordinary and necessary business expense paid or incurred in carrying on a trade or business” and as result is tax-deductible, the IRS said in a May 31, 2013, memorandum.
The U.S. Internal Revenue Service issued a final rule on Fees on Health Insurance Policies and Self-Insured Plans for the Patient-Centered Outcomes Research Trust Fund, published in the Federal Register on Dec. 6, 2012.
The Patient Protection and Affordable Care Act (PPACA) establishes the nonprofit Patient-Centered Outcomes Research Institute (PCORI) to promote the use of evidence-based medicine by disseminating comparative clinical effectiveness research findings.
To fund the PCORI, the PPACA imposes a fee on health insurers and employer who sponsor self-insured health plans, for each policy or plan year ending on or after Oct. 1, 2012, and before Oct. 1, 2019, with the first fee payment due July 31, 2013. Subsequently, the PCORI fee will be due no later than July 31 following the last day of the plan year.
The fee will be $1 per plan participant for the first plan year ending after Sept. 30, 2012, and $2 per participant in succeeding years. For policy or plan years ending on or after Oct. 1, 2014, the fee will be increased based on increases in the projected per capita amount of national health expenditures.
Scope of Fees Clarified
Among other points, the final rule clarifies that the fee imposed on an employer sponsoring a self-insured health plan is based on the average number of lives covered under the plan during the plan year.
If an employer sponsors more than one self-insured arrangement, those arrangements may be treated as a single plan for purposes of calculating the PCORI fee, but only if the plans have the same plan year.
Several commentators had requested that the final regulations provide that PCORI fees do not apply multiple times if accident and health coverage is provided to one individual through more than one policy or self-insured arrangement (for example, where an individual is covered by a fully insured major medical insurance policy and a self-insured prescription arrangement).
The final rule does not adopt the requested change. For example, for an employee covered by both a group insurance policy and a health reimbursement arrangement (HRA), the group insurance policy falls within the definition of a specified health insurance policy and the fee applies to the insurer, while the HRA falls within the definition of an applicable self-insured health plan, so that the fee applies to the plan sponsor.
The final rule also applies PCORI fees to policies and plans that provide accident and health coverage to retirees, including retiree-only policies and plans. And it states explicitly that COBRA and other types of continuation coverage must be taken into account in determining PCORI fees, unless the arrangement is otherwise excluded.
However, in response to comments, the final rule permits a self-insured health plan that provides accident and health coverage through fully insured options and self-insured options to determine the fee imposed by disregarding the lives that are covered solely under the fully insured options.
What Plans Are Subject to the Comparative Evidence "PCORI" Fee?
Plans subject to the fee:
• Medical plans.
• Prescription drug plans.
• Self-insured dental or vision plans, if provided without a separate election or premium charge.
• Health reimbursement arrangements (HRAs).
• Retiree-only health plans (even though some are exempt from other PPACA mandates).
Plans exempt from the fee:
• Separately insured dental or vision plans.
• Self-insured dental or vision plans, if subject to separate coverage elections and employee contributions.
• Expatriate coverage provided primarily for employees who work and reside outside of the U.S.
• Health savings accounts (HSAs).
• Most flexible spending accounts (FSAs).
• Employee assistance programs (EAPs), wellness programs and disease management programs that do not provide "significant benefits in the nature of medical care or treatment."
Source: Pinnacle Financial Group, Patient-Centered Outcomes Research Fee Overview
Reconsidering Plan Designs
According to an alert from law firm Leonard, Street and Deinard, employers who sponsor multiple self-funded plans with the same plan year ends can aggregate those plans and pay the fee once on overlapping lives. However, because the fee is imposed on the plan sponsor and not on the plan itself, the employer must pay the fee outside the plan, meaning that plan assets cannot be used to pay the fee.
The law firm's alert also notes that:
Employers with self-funded high deductible health plans that are paired with self-funded HRAs can aggregate those plans and pay the fee once with respect to an individual covered by both the high deductible health plan and the HRA. In contrast, an employer that sponsors a fully insured high deductible health plan paired with a self-funded HRA will essentially be required to pay the fee twice on the same lives. The IRS concluded that because separate statutes impose the fee on plan sponsors of self-funded plans and insurance companies issuing fully insured policies, the IRS is unable to permit employers with both types of plans to combine them for purposes of determining the number of covered lives that they have.
Employers who sponsor self-funded HRAs with fully insured medical plans may wish to consider other plan designs to avoid this fee, such as self-funding the high deductible health plan or moving to a plan design that uses HSAs instead of HRAs. Alternatively, if there are relatively few people covered under the HRA and if the HRA has been an effective plan design, employers may simply decide to continue offering the plan and pay the additional fee.