To (PCORI) Fee…or Not to Fee. THAT is the Question!

One of the Affordable Care Act‘s (ACA) 18 new “Taxes, Elimination of Deductions, and New Fees”     (click on - http://www.uschamber.com/health-reform/added-costs) is something called the Patient -Centered Outcomes Research Institute fee (or PCORI for short).  The fee is applicable to virtually any health insurance plan (both fully insured and self-funded), specifically the following:

·         Fully insured medical plans (individual and group)

·         Self funded group health plans (including some HRA and FSA plans)

·         Retiree only medical plans

·         COBRA health insurance coverage

·         Limited or Mini-Medical plans

·         Federal/State/Local governmental health plans offered by an employer

PCORI fees are NOT applicable to the following types of plans:

·         Long term/Nursing home plans offered separately

·         Stand alone dental and vision plans (e.g., either can be elected without electing a health plan)

·         Accident only

·         Disability Income

·         Disease specific (e.g., cancel, critical illness)

·         Medicare supplement

·         Workers compensation

·         Stop loss/Reinsurance

·         International medical

·         On-site medical clinics

·         Government plans such as Medicare, Medicaid, and CHIP

·         Health Savings Accounts (HSA)

·         Employee Assistance Programs (EAP)

·         Wellness programs

·         Disease management programs

The fee applies to plan years beginning on or after 10/2/2011, and is payable by INSURERS for fully insured plans, and EMPLOYERS on self funded plans, and is due by July 31, 2013.  The initial annual fee is $1 per plan participant (or “belly button”) including dependents, increasing to $2 for plan years on or after 10/2/2012.  So for example a self funded plan providing coverage to 156 members would owe $156 for the plan ending in 2012, and $312 for the plan year ending in 2013 (assuming no change in enrollment). 

There are a variety of allowable methods available to self insured employers for calculating the PCORI fee (e.g., actual count, snapshot, and form 5500 methods).  After having recently assisted one particular employer with the calculation of their fee, I would advise consideration of the “form 5500” method initially, for ease and lowest potential total amount.

IMPORTANTLY: So if your plan is fully insured, THE INSURANCE COMPANY AND NOT THE EMPLOYER is obligated to calculate and file the fee.  If your plan is self insured (or partially self insured), THE EMPLOYER is responsible for calculating and remitting the fee on IRS form 720 by July 31, 2013.  For a more detailed overview of PCORI fees, click on - http://www.irs.gov/uac/Patient-Centered-Outcomes-Research-Trust-Fund-Fee:-Questions-and-Answers

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Understanding Employer Shared Responsibility (per the ACA)

In my travels and presentations to various employer organizations around the country, I'm finding a great deal of misunderstanding concerning one of the more pressing aspects of the Affordable Care Act (or Obamacare) - the so called "employer shared responsibility" provision. Also referred to as the "employer mandate" and the "pay or play provision", this aspect of the ACA poses two distinct types of penalty exposure to affected employers (generally those that employ at least 50 full time and full time equivalent employees). It’s extremely important to clarify that these penalties represent EXPOSURE, first and foremost; and only become actual payable penalties if specific action is taken by EMPLOYEE(s).

So let's examine the 2 penalty exposures and more importantly how each is triggered...

1. The "pay" penalty, which I like to refer to as the "sledge hammer". Employers that opt NOT to offer a qualifying health plan face a penalty, IF TRIGGERED, of $2,000 (adjusted for inflation each year) x the total number of full time employees (30 hrs. a week minimum, starting with the 31st employee). For example, a firm employing 100 full time employees that choose not to offer qualifying coverage (or in ACA terms, pay), would have penalty exposure equal to 100-30 = 70 x $2,000 (adjusted for inflation each year) = $140,000 or $11,667 per month. IMPORTANTLY - this penalty is ONLY triggered if at least 1 eligible employee does the following: 1. accesses the public health insurance exchange/marketplace; 2. is determined to be eligible for a subsidy/assistance; 3. purchases coverage on the public exchange/marketplace. IF ALL 3 OF THESE ACTIONS ARE NOT TAKEN BY ANY EMPLOYEE, THE EMPLOYER PAYS NO FINE.

2. The "play" penalty, which I like to refer to as the "tack hammer". Employers that OPT TO OFFER a qualifying plan that fails to meet either of 2 ACA requirements - 1. affordability (employee's share of the premium for employee only coverage cannot exceed 9.5% of their 2013 W-2 income); or 2. minimum coverage (the plan must provide at least a 60% level of coverage, which most plans will have no trouble meeting). If either or both of these "tests" fail, the employer would face a penalty, IF TRIGGERED, of $3,000 (adjusted for inflation each year) x the number of employees that do the following: 1. accesses the public health insurance exchange/marketplace; 2. is determined to be eligible for a subsidy/assistance; and 3. purchases coverage on the public exchange/marketplace. IF ALL 3 OF THESE ACTIONS ARE NOT TAKEN BY ANY EMPLOYEE, THE EMPLOYER PAYS NO FINE.

To access a 12 minute podcast in which I discuss the ACA employer shared responsibility provision in more depth, click onhttp://blog.vistage.com/podcasts/podcast-how-the-affordable-care-act-will-impacts-your-business/

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Notices, Summaries, and Forms, Oh My!



One of the most challenging aspects of Affordable Care Act (ACA) compliance is all the new forms, notices, and summaries required to be drafted, edited, approved, and ultimately distributed.  The Department of Labor (DOL) recently issued guidance intended to assist employers in providing ACA related information to employees.  This blog entry is intended to provide readers with a "heads up" on some new and revised notice/summary changes, and deadlines, resulting from the DOL's guidance.
Click here to access the full story - https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Wellness Programs and the Affordable Care Act (ACA)

 The "trinity" of ACA enforcement (i.e., Departments of Labor, Treasury, and Health and Human Services) issued final regulations relative to wellness programs and rewards, on May 29, 2013. There were no surprises to what we already knew from the law itself.  But reviewing the briefing reminded me that there are two (2) profoundly different types of wellness programs:

1. "Participatory"; and 2. "Health-Contingent".  Program rewards for the later are regulated/limited by the ACA, beginning in 2014, to no more than 30% (an increase from the present amount of 20%).  However, there are NO LIMITS placed/regulated for the former type - Participatory - wellness programs.  It is also important to note that the ACA allows a penalty of up to 50% for programs related to tobacco use. 

Another important distinction to note relative to Wellness Programs, are the two (2) types of Health Contingent programs that exist: 1. "Activity-Only" (think walking programs, biggest loser contests, weight watchers, etc.); and 2. "Outcome-Based" (specific health related targets such as BMI or blood pressure must be attained in order to receive a reward).  And remember, reasonable alternatives must be made available to individuals (activity-only program) for whom attaining the goal is unreasonably difficult due to a medical condition; and for ALL INDIVIDUALS  (outcome-based program) who do not meet the program's standard(s).

Wellness programs have proven to be very effective at reducing healthcare related costs, improving morale, and reducing the incidence rates of absenteeism and presenteeism.  I've seen return on investment (or ROI) figures ranging from 3:1 - 8:1.  It's important to know what you can and can not do in the area of "carrot and stick", along with recognizing what areas of the company or organization should be the focus or target of the wellness program.

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