Reminder: PCORI Fee Due by August 1, 2016. The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-insured plan sponsors in order to help fund the Patient-Centered Outcomes Research Institute (PCORI). The fee is required to be reported and paid once a year, no later than July 31 of the calendar year immediately following the last day of the plan year. This year the filing is due to the IRS by August 1, 2016 (since July 31 falls on a weekend, the form is due by the next business day, August 1).

The PCORI fee that is due by August 1, 2016 is $2.17 per covered life for plan years ending October – December 2015 and $2.08 per covered life for plan years ending January – September 2015.

“Covered lives” include all covered participants and dependents, including retirees and those on COBRA. The IRS allows several different methods for determining the average number of covered lives. For more information about these methods, fee amounts, and the health plans that are required to pay the PCORI fee, see www.irs.gov/uac/newsroom/patient-centered-outcomes-research-institute-fee. 

Form 720 (Rev. April 2016), along with related payment voucher Form 720-V, should be used to report and remit the PCORI fee to the IRS (see Part II, lines marked “IRS No. 133″ on the second page of the Form 720). Although the Form 720 is designed for quarterly payments of certain excise taxes, the PCORI fee is paid only annually. The instructions also note that deposits are not required for PCORI fees (that is, the fees are paid when the Form 720 is filed), so plan sponsors are not required to use the IRS’s Electronic Federal Tax Payment System (EFTPS) to pay these fees. Self-insured multiemployer plans may pay the PCORI fee from plan assets.

Departments Finalize New Version of the Summary of Benefits and Coverage. On April 6, 2016, the government (HHS, DOL and IRS) announced key enhancements to the Summary of Benefits and Coverage (SBC) template and Uniform Glossary. The improvements include language and terms to improve consumers’ understanding of their health coverage.

The updated template has a new (additional) coverage example that addresses coverage for a foot fracture so that a consumer understands what a plan covers in an emergency scenario. Changes have also been made to the SBC to improve readability for consumers. The new templates include more information about cost sharing, such as enhanced language to explain deductibles and a requirement that plans address individual and overall out-of-pocket limits in the SBC. These improvements reflect input from consumer groups, the National Association of Insurance Commissioners, and other stakeholders.

Plans with annual open enrollment periods must start using the new template on the first day of the first open enrollment period that begins on or after April 1, 2017, with respect to coverage for plan or policy years beginning on or after that date. Plans without an annual open enrollment period must start using the new template on the first day of the first plan or policy year that begins on or after April 1, 2017.

Further information regarding the SBC and supporting materials can be found here:

https://www.cms.gov/cciio/Resources/Forms-Reports-and-Other-Resources/index.html#Summary of Benefits and Coverage and Uniform Glossary

[Excerpts from CMS Press Release, 4/6/2016]

Form 5500 Preparation Pointers. The 2015 Form 5500 filing due date is July 31 for calendar year plans or October 17 if on extension (Form 5558 must be filed prior to July 31 to request automatic extension). Close review of the Form 5500 is advised to ensure it is properly prepared and does not unnecessarily raise red flags to the Department of Labor and/or the IRS. A few points to consider:

The IRS added some new compliance questions to the 2015 Form 5500/5500-SF aimed at identifying noncompliance/compliance issues. The Form 5500 instructions (page 1 “Changes to Note”), however, specifically provide that plan sponsors should not complete these questions for the 2015 plan year filing. Accordingly, do not answer those questions. Answering them might highlight a failure to follow the Form 5500 instructions, and may also communicate compliance problems.

The DOL issued a report about a year ago entitled “Assessing the Quality of Employee Benefit Plan Audits.” The report was very critical of the plan audit process and is bound to result in closer examinations of plan audit reports. As such, a close review of the audit report in addition to the Form 5500 itself is warranted.

Obtain appropriate proof of the Form 5500 filing (and the filing of the Form 5558 extension form). These steps are often overlooked by plan sponsors. It is easy to obtain such proofs in order to avoid an argument with the government over the imposition of potentially significant fines for not filing or for filing late.

Are you filing for all plans that must file, such as flexible savings accounts and/or health reimbursement accounts?

If you failed to file a Form 5500 in the past or will file late, quick participation in the DOL’s Delinquent Filer Voluntary Compliance Program (“DFVCP”) should be explored.

The bottom line is that it is critical to follow the Form 5500 instructions and carefully review the entries in order to avoid triggering an investigation. It is the plan sponsor who signs and submits the form under penalty of perjury; accordingly, the signer has a keen interest in ensuring the Form 5500 is properly and accurately completed.

[ERISA Newsletter, John C. Hughes, Esq., The ERISA Law Group, June 2016]

ACA FAQ Part 32 Says COBRA Notices Can Provide Additional Information on Marketplace Plans

The DOL, HHS, and IRS have jointly issued a single FAQ confirming that group health plan administrators may include in their COBRA election notices information about Exchange coverage that goes beyond the information included in the DOL’s model notice. (The DOL revised its model election notice in 2013 and again in 2014 to include basic information about the Exchanges. The model is available on the DOL website.) The FAQ states that administrators may include additional information, such as (1) how to obtain assistance with Exchange enrollment (including special enrollment), (2) the availability of financial assistance, (3) information about Exchange websites and contact information, (4) general information regarding particular products offered in the Exchanges, and (5) other information that may help qualified beneficiaries choose between COBRA and other coverage options. The agencies encourage administrators to consider how they can help individuals maintain the coverage that would best suit their needs and note that COBRA notices may be tailored to particular groups, such as young adults aging out of dependent coverage under their parents’ health plan. The FAQ also includes a reminder that COBRA notices must be “easily understood by the average plan participant.”

[Thomson Reuters Tax & Accounting News, June 21, 2016]

Disclaimer – This newsletter’s purpose is to inform our clients and colleagues of recent legislative health care-related developments. It is not intended, nor should it be used, as a substitute for specific legal advice.

Health and Welfare Notes is prepared four to six times annually and will accompany Retirement News. If there are questions concerning the information discussed, call richard Gabriel associates and ask for Gabe Zinni, Karen Irwin, Cindy Swartz or Nancy Cunningham.