BAN Blog

 

With the 2024 reference year RxDC reporting deadline approaching in June, plan sponsors should re-familiarize themselves with the reporting requirements. The 2024 reference year RxDC Reporting Instructions have been released, though there were no changes to the reporting requirements or data elements from last year.

As a reminder, the Consolidated Appropriations Act, 2021 includes a provision that requires group health plans and health insurance issuers (collectively “plans and issuers”) to report certain specified data related to prescription drug and other health care spending. The first RxDC report (for 2020 and 2021) was due on January 31, 2023, with the reports for 2022 and 2023 due on June 1, 2023 and June 1, 2024, respectively. The deadline to submit reporting for calendar year 2024 is June 1, 2025 (and continues each June 1^st thereafter).

Next Steps for Employers

In anticipation of the June 1, 2025 deadline, plan sponsors may receive communications from their carriers, TPAs, PBMs and other vendors regarding their expectations for completing the reporting. In our experience, carriers, TPAs, PBMs, and other vendors have varying requirements and expectations of what they need from plan sponsors to successfully complete the reporting, and some may delegate some of the reporting responsibility to the plan sponsor. For example, if your insurance company, TPA, or PBM sent you a survey or questionnaire to collect information about plan numbers, premium, or funding types, it is likely that they are reporting the P2 and D1 files on your behalf. Therefore, we recommend the following:

• Respond to any requests for information you may receive and coordinate with your vendors to understand their expectations to ensure all reporting is completed in full on behalf of the plan. Note: Some carriers require responses by early March.
• If your vendor sent you an email or letter asking you to create a HIOS account or stating that they will not submit P2 and D1 on your behalf, that means you must submit P2 and D1 directly to CMS (or engage a third-party to submit them for you). Thus, you and/or a third party submitting P2 or D1 on your behalf will need to follow the RxDC Reporting Instructions and timely complete the submission.

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About the Author. This alert was prepared by Barrow Lent LLP, a national law firm with recognized experts on ERISA, Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers, or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2025 Barrow Lent LLP. All Rights Reserved.

 

On Monday, December 23, 2024, President Biden signed into law two bills, H.R. 3797 (the “Paperwork Reduction Act”) and H.R. 3801 (the “Employer Reporting Improvement Act”),which will positively impact applicable large employers (“ALEs”) and other entities required to furnish forms 1095-B or 1095-C to individuals.

Background
Under the Affordable Care Act, ALEs (i.e., employers who have employed an average of 50 or more full-time equivalent employees in the prior year) must file forms 1094-C and 1095-C with the IRS and furnish forms 1095-C to full time employees. In addition, sponsors of self-funded plans must furnish forms to covered individuals. The furnishing deadline is generally March 1 of each year.

Further, the IRS issues a penalty letter (Letter 226J) when an employee of an ALE receives a premium tax credit for Marketplace coverage and the ALE reports the employee as full-time without a qualified reason as to why affordable health insurance was not offered. An ALE’s response to Letter 226J is generally due 30 days from the date of Letter 226J. If the ALE does not respond timely to Letter 226J or any reminder letter, the IRS will assess the amount of the proposed penalty and issue a notice and demand for payment.

Summary of the New Laws
The Paperwork Reduction Act considers employers to meet their requirement to furnish form 1095-B or 1095-C to employees if the following conditions are met:

• The employer or reporting entity (e.g., insurance carrier) provides a clear, conspicuous, and accessible notice that any individual who is otherwise required to receive the form 1095-B or 1095-C can request a copy, and
• The employee can request a copy of the form, which the employer or reporting entity must provide no later than the later of:
  • January 31 of the year following the calendar year for which the return was required to be made, or
  • 30 days after the date of such request.

 

The Paperwork Reduction Act is effective for calendar year 2024 forms that are required to be furnished to employees in 2025.

The Employer Reporting Improvement Act allows employers to provide form 1095-B or 1095-C to individuals electronically if they have consented to receive it electronically. It also allows employers to use an individual’s date of birth, in lieu of a social security number, if the social security number is not available when completing the forms, except when reporting the employee on form 1095-C.

In addition, the Employer Reporting Improvement Act provides employers more time to respond to IRS ESRP letters. In many cases, employers are given approximately 30 days to respond to an initial ESRP letter from the IRS; however, the new law requires the IRS to give employers 90 days to respond to the initial letter before the IRS can take any action against the ALE. This gives employers significantly more time to review Letter 226J and gather the necessary data to prepare an appeal. The law applies to assessments proposed in taxable years beginning after the enactment of the law, so initial Letters 226J sent after December 23, 2024. It will not extend the deadline for Letters 226J already sent to employers before December 23, 2024.

Finally, the Employer Reporting Improvement Act established a 6-year statute of limitations, beginning from the date the forms 1094-C and 1095-C were required to be filed (or the date they were filed if filed after the filing deadline) for the IRS to seek an ESRP. This portion of the law is effective for the 2024 tax year forms (which are due in 2025) and beyond.

Next Steps for Employers
While these new laws are currently effective, it is important to note that none of these changes impact an ALE’s obligation to (1) offer affordable, minimum essential coverage meeting minimum value requirements to its full-time employees, or (2) file forms 1094-C and 1095-C with the IRS by the applicable filing deadline.

ALEs are, however, afforded more flexibility when furnishing these forms to their employees or former employees, and more time is permitted when responding to initial IRS ESRP letters.
Further, while ALEs are given more time to respond to IRS Letters 226J, they should ensure they have a process in place to identify the letters, ensure the letters are routed to the appropriate person at the company, and timely respond to the letters.

Thus, ALEs and other reporting entities such as sponsors of small, self-funded plans should:

• Be aware of the changes applicable to using an individual’s birthdate in lieu of a social security number when completing the filing.
• Work with their filing vendors to determine whether they can amend current contracts to eliminate the mail furnishing provisions if they do not want to furnish the forms by mail.
• If they will be furnishing the forms or notice electronically, work with their filing vendor, payroll provider, or their benefit administration system to notify individuals of how and where to access their form 1095-B or 1095-C.
• Ensure they have processes in place to ensure any Letters 226J are appropriately and timely routed to the correct department and responded to timely.
• Also, because this does not change an ALE’s obligation to file forms 1094-C and 1095-C with the IRS, they should recall that all forms must be filed electronically for any company that files 10 or more returns with the IRS, which includes most tax forms required to be filed by the company.

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About the Author. This alert was prepared by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act and Consolidated Appropriations Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers, or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2024 Barrow Weatherhead Lent LLP. All Rights Reserved.

 

The IRS has released Notice 2024-83, which sets the applicable PCORI fee for plan years ending between October 1, 2024 and September 30, 2025 at $3.47 per covered life.

The PCORI fee helps fund the Patient-Centered Outcomes Research Trust, which was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury.  Under the ACA, most employer sponsors and insurers were required to pay PCORI fees until 2019 or 2020, as it only applied to plan years ending on or before September 30, 2019.  However, the PCORI fee was extended to plan years ending on or before September 30, 2029 as part of the Further Consolidated Appropriations Act, 2020.

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.  The fee must be paid on or before July 31^st each year.  The fees due by July 31, 2025 are for plan years ending in 2024 and are as follows:

• For plan years ending between January 1, 2024 and September 30, 2024, the fee is $3.22 per covered life.
• For plan years ending between October 1, 2024 and December 31, 2024, the fee is $3.47 per covered life.

 

Insurance carriers are responsible for calculating and paying the PCORI fee for fully insured plans.  The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA.  In general, health FSAs are not subject to the PCORI fee.

Employers that sponsor self-insured group health plans must report and pay PCORI fees using the second quarter IRS Form 720, Quarterly Federal Excise Tax Return.  The second quarter form is generally not released by the IRS until the second quarter of the applicable filing year (usually in or around May of the applicable filing year).  Therefore, the Form 720 used for the 2024 filing deadline will not likely be available until around May 2025, and employers who sponsor self-insured group health plans subject to the PCORI fee must wait to file until the correct Form 720 is available.

The average number of covered lives for the plan year is generally calculated using the snapshot, snapshot factor, actual count, or Form 5500 method.  These counting methods will be described in more detail in a future alert as we approach the 2025 filing deadline.

Also note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it generally should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions.  However, an employer’s payment of PCORI fees is tax deductible as an ordinary and necessary business expense.

Next Steps for Employers

There is no action that is required by employers at this time as the applicable Form 720 will not be available until late Spring 2025.

In the meantime, if an employer believes they may have failed to file PCORI fees for one or more plan years prior to the plan year ending in 2024, they would need to file the Form 720 for the 2^nd quarter of the applicable filing year that applies to the plan year missed.  For example, if they missed filing their PCORI fees for the plan year ending in 2023 plan year, they would use the 2^nd quarter Form 720 for 2024.  Historical forms can be located on the IRS website.  We recommend consulting with counsel to discuss the historical filing process.

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About the Author.  This alert was prepared by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2024 Barrow Weatherhead Lent LLP.  All Rights Reserved.

When the Consolidated Appropriations Act, 2021 (the “CAA”) was enacted on December 27, 2020, it included a provision that prohibits group health plans and health insurance carriers from entering into certain agreements that, either directly or indirectly, restrict the release of certain information related to provider networks and de-identified encounter data, among other things. Such restrictions are commonly referred to as “gag clauses.” The CAA also requires plans and carriers to attest annually that their agreements do not include such impermissible gag clauses.

The first gag clause attestation was due on December 31, 2023, with the next one coming due by December 31, 2024, which covers the period between the last attestation and the date this year that the attestation is submitted. The attestation was modified somewhat for 2024, including, among other things, a new requirement to include an attestation year (i.e., the year the attestation is submitted), a new requirement to include the attestation period (i.e., the date range for the attestation, which is the period between when the last gag clause attestation was submitted and the current gag clause submission), and a section to include the plan type (ERISA plan, non-federal governmental plan, or church plan).

Key gag clause attestation requirements and considerations are described below, though more extensive FAQs can be located (along with the instructions, forms, and user manuals for submitting the attestations) on the CMS website.

What is a Gag Clause?
Under the CAA, a gag clause is defined as:

1. restrictions on the disclosure of provider-specific cost or quality of care information or data to parties such as the plan sponsor, participants, beneficiaries, or referring providers;
2. restrictions on electronic access to de-identified claims and encounter information or data for each participant, beneficiary, or enrollee upon request and consistent with HIPAA, GINA, and ADA privacy regulations, including, on a per claim basis—

a. Financial information, such as the allowed amount, or any other claim-related financial obligations included in the provider contract;
b. Provider information, including name and clinical designation;
c. Service codes; or
d. Any other data element included in claim or encounter transactions; or

3. restrictions on sharing information or data described in (1) and (2), or directing that such information or data be shared, with a business associate.

 

The gag clause provisions of the CAA (specifically Code section 9824, ERISA section 724, and PHSA §2799A-9(a)(1)), generally prohibit plans and carriers from entering into agreements with providers, TPAs, or other service providers that include such provisions.

Where would I Typically Find a Gag Clause?
Gag clauses in this context might be found in agreements between a plan or carrier and any of the following parties:

• a health care provider;
• a network or association of providers;
• a third-party administration (“TPA”) or pharmacy benefits manager (“PBM”); or
• another service provider offering access to a network of providers.

 

Thus, a group health plan should confirm that its carrier, TPA and/or PBM agreements do not contain prohibited clauses. These clauses would typically be found in confidentiality or other privacy provisions of the agreements, though it is important for the agreements to be thoroughly reviewed. We would suggest working with your counsel to review the agreement to determine whether it impermissibly restricts access to specific information that would be otherwise covered under the gag clause provisions, or whether there is language that only restricts access to such information in conformity with the gag clause requirements of the CAA or other applicable state or federal law.

To which plans do the gag clause restrictions apply?
All group health plans (excluding FSAs, HRAs or other excepted benefits such as dental or vision) and insurance carriers are subject to these prohibitions. This includes self-funded and fully insured plans and grandfathered plans, as well as non-ERISA plans sponsored by non-federal governmental employers (i.e., state and local governmental employers), and church plans subject to the Internal Revenue Code.

What is the attestation requirement?
The CAA required group health plans and health insurance carriers to attest annually to the government that they have no “gag clauses” in their contracts. Plans and carriers must complete the GCPCA form electronically using the form provided by the Agencies.

When is the attestation/GCPCA form due?
The attestation is due on or before December 31, 2024, and covers the period since the last preceding attestation.

Who is responsible for completing the attestation for our group health plan?
That depends on whether the plan is fully insured or self-funded and your contractual arrangement with the carrier or TPA. While both the carrier and group health plan are required to submit a GCPCA with respect to a fully insured plan, a carrier may submit a GCPCA with respect to a fully insured plan that will satisfy the plan’s obligation. We expect that most carriers will agree to complete the attestation for their fully insured plans. Self-funded plans can contract with their TPA and/or their PBM to complete the attestation on behalf of the plan; however, the plan is ultimately responsible for ensuring the attestation is timely completed. It is important to communicate with your carrier or TPA before the December 31, 2024 deadline to determine who will be completing the attestation on behalf of the plan. We recommend ensuring that responsibility for completing the GCPCA is assigned well before the December 31st deadline so there are no surprises. The Agencies released an instruction manual for the webform to assist with completing the attestation, when ready for filing. Note, entities reporting on behalf of multiple responsible entities are required to also submit an excel spreadsheet.

Are there penalties if our group health plan does not complete the attestation?
There are no specific penalties outlined in the CAA; however, in the FAQs, the Agencies indicate that failing to submit the attestation by the deadline may subject the plan or carrier to enforcement action. In such cases, it’s possible for the Agencies to assess a penalty of up to $100 per day per affected individual.

Where can I find more information on gag clauses and completing the attestation?
The FAQs are a good place to start, as well as the HIOS GCPCA User Manual, which explains how to use the GCPCA module within the Health Insurance Oversight System (“HIOS”).

Next Steps for Employers
In preparation for submitting their attestations, employers should consider the following:
• If you have a fully insured plan and the carrier is the same carrier as last year, you may want to confirm the same process will be used again this year (e.g., the carrier files the attestation for you or provides you with certification that the plan is in compliance and you submit your own attestation). If it is a new carrier, then you should consult with the carrier to determine whether they will be submitting the attestation for the plan.
• Similarly, if your plan is self-funded, and you have the same TPA as last year, you may consider confirming that the TPA will use the same process again this year (e.g., the TPA files the attestation for you or provides you with certification that the plan is in compliance and you submit your own attestation). If it is a new TPA, then you should review the TPA contract and/or consult with the TPA to determine whether they will be submitting the attestation for the plan.
• If you have separate TPAs, such as a TPA for medical and a PBM for prescription drug benefits, then you will want to ensure the process each of the TPAs will use.
• If your arrangement with your carrier, TPA, or PBM is such that you will be responsible for filing the attestation, ensure you have read all of the instructions for submitting the attestation and that you have completed the registration process. We recommend registering in advance of the filing deadline to be safe.

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About the Author. This alert was prepared for [Agency Name] by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act and Consolidated Appropriations Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers, or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2024 Barrow Weatherhead Lent LLP. All Rights Reserved.