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August 19, 2014

HRB 95 - Reminder: PCOR Fees and Transitional Reinsurance Fees

Released June 18, 2014 I Download as a PDF

June 18, 2014 -- July 31st is fast approaching which means it is time to begin thinking about the Patient-Centered Outcomes Research (PCOR) fee.  And, we are almost halfway through 2014, which means the first transitional reinsurance fee will soon be due.  Following is a summary of these two fees imposed by the Affordable Care Act.  Please refer our prior CBIZ Health Reform Bulletins listed below for additional background information.

Provision

Patient-Centered Outcome Research Fee

Transitional Reinsurance Fund (Premium Stabilization Program)

 

 

Plan Applicability

 

 

  • Insurers of all-sized fully-insured plans
  • All-sized employers of self-funded plans

Also applies to:

  • Retiree-only plans
  • COBRA and state continuation coverage
  • Non-integrated health reimbursement arrangements (HRA) (generally, not permissible in 2014 and beyond unless it is excepted)
  • Integrated HRA  (Note: an HRA integrated with insured plan would pay the fee; an HRA integrated with self-funded plan does not)Medical flexible spending accounts (FSA) subject to HIPAA
  • Insurers of all-sized fully-insured plans
  • All-sized employers of self-funded plans

Also applies to:

  • Post-employment plans that are primary to Medicare, such as early retiree plans
  • COBRA continuation coverage

 

 

 

Provision

Patient-Centered Outcome Research Fee

 

Transitional Reinsurance Fund (Premium Stabilization Program)

 

 

Plan Applicability, con’t

 

Plans not subject to the fees include:

  • HIPAA-excepted benefit plans such as limited scope dental and vision plansFSAs excepted from HIPAA Employee assistance programs, disease management programs, and wellness programs if the program does not provide significant benefits in the nature of medical care or treatment Expatriate group health plans primarily covering employees who work and reside outside the U.S. (however, foreign nationals working in the US are counted in the calculation of the fee)

Plans not subject to fees include:

  • HIPAA-excepted benefit plans such as limited scope dental and vision plansHRAs integrated with comprehensive insured or self-funded group coverage Flexible medical spending account plans (FSA) Health savings accounts (HSA) except an HDHP used in conjunction with HSA is considered major medical insurance and thus, subject to reinsurance contributions Employee assistance plans, disease management programs, and wellness programs if the program does not provide significant benefits in the nature of medical care or treatment. Post-employment plans where Medicare is primary to group plan. Stand-alone prescription drug plans TRICARE or other military benefit plans Certain Indian Tribal benefit programs Certain expatriate plans

 

Amount of Fee

  • $1 per covered life for plan years ending prior to October 1, 2013
  • $2.00 per covered life (indexed) for plan years thereafter
  • For 2014: $5.25 per covered life per month based on calendar year
  • For 2015: $3.66 per covered life per month based on calendar year

Insured Plans:  Methods for Determining Covered Lives

 Actual count, Snapshot, Member months, or State form methods

 Actual count, Snapshot, Member months, or State form methods

 

Provision

Patient-Centered Outcome Research Fee

 

Transitional Reinsurance Fund (Premium Stabilization Program)

Self-Funded Plans: Methods for Determining Covered Lives

 Actual count, Snapshot, or Form 5500 methods

 Actual count, Snapshot, or Form 5500 methods

 

Entity Paying Fee

 

  • By insurer of fully insured plan
  • By plan sponsor of self-funded plan

 

 

  • By insurer of fully insured plan
  • By plan sponsor of self-funded plan

 

 

Reporting and Paying the Fee

PCOR fees paid once a year in connection with IRS Form 720, Quarterly Federal Excise Tax Return:

  • For insured plans, Form 720 due by July 31st following the close of the plan year.
  • For self-funded plans, Form 720 due by July 31st of the calendar year following the plan year end.
  • Submit annual enrollment count (based on first 9 months of year) to HHS by November 15th of each year on form available via www.pay.gov.  Reporting form will auto-calculate contribution amounts and allow payments to be made.
  • Contributions paid in two installments: 1st installment due within 30 days of invoice reflects actual reinsurance contribution (plus HHS’s administrative costs); 2nd installment will be invoiced in 4th quarter following the year of submission and reflects amounts allocated to U.S. Treasury.

Fees paid from Plan Assets?

No

Yes

Applicability Period

Plan years ending after 9/30/12

No fee assessed for plan years ending after 9/30/19 (for calendar year plans, this means the 2018 plan year)

Calendar years 2014 to 2016

 

Provision

Patient-Centered Outcome Research Fee

 

Transitional Reinsurance Fund (Premium Stabilization Program)

 

 

 

 

Additional Information and Resources

CBIZ Health Reform Bulletins

CBIZ Health Reform Bulletins

 

 

About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.

 

 

 

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

 

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