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Legal Alert: Reminder PCORI Fees Due By July 31, 2019

Posted on May 21, 2019May 22, 2019 by Stacy Barrow

REMINDER: PCORI Fees Due By July 31, 2019

Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2019 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI). As background, the PCORI 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 will be required to pay PCORI fees until 2019 (the fee does not apply to plan years ending on or after October 1, 2019). For employers with calendar year plans, this July’s payment will be their final PCORI filing.

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. This year, employers will pay the fee for plan years ending in 2018.

• For plan years that ended between January 1, 2018 and September 30, 2018, the fee is $2.39 per covered life and is due by July 31, 2019.
• For plan years that ended between October 1, 2018 and December 31, 2018, the fee is $2.45 per covered life and is due by July 31, 2019.

For example, a plan year that ran from July 1, 2017 through June 30, 2018 will pay a fee of $2.39 per covered life. Calendar year 2018 plans will pay a fee of $2.45 per covered life.

NOTE: The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan. 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 IRS Form 720, Quarterly Federal Excise Tax Return. If this is the employer’s last PCORI payment and they do not expect to owe excise taxes that are reportable on Form 720 in future quarters, they may check the “final return” box above Part I of Form 720.

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.

Historical Information for Prior Years
• For plan years that ended between October 1, 2017 and December 31, 2017, the fee is $2.39 per covered life and is due by July 31, 2018.
• For plan years that ended between January 1, 2017 and September 30, 2017, the fee is $2.26 per covered life and is due by July 31, 2018.
• For plan years that ended between October 1, 2016 and December 31, 2016, the fee is $2.26 per covered life and was due by July 31, 2017.
• For plan years that ended between January 1, 2016 and September 30, 2016, the fee is $2.17 per covered life and was due by July 31, 2017.
• For plan years that ended between October 1, 2015 and December 31, 2015, the fee was $2.17 per covered life and was due by August 1, 2016.
• For plan years that ended between January 1, 2015 and September 30, 2015, the fee was $2.08 per covered life and was due by August 1, 2016.
• For plan years that ended between October 1, 2014 and December 31, 2014, the fee was $2.08 per covered life and was due by July 31, 2015.
• For plan years that ended between January 1, 2014 and September 30, 2014, the fee was $2 per covered life and was due by July 31, 2015.
• For plan years that ended between October 1, 2013 and December 31, 2013, the fee was $2 per covered life and was due by July 31, 2014.
• For plan years that ended between January 1, 2013 and September 30, 2013, the fee was $1 per covered life and was due by July 31, 2014.
• For plan years that ended between October 1, 2012 and December 31, 2012, the fee was $1 per covered life and was due by July 31, 2013.

Counting Methods for Self-Insured Plans

Plan sponsors may choose from three methods when determining the average number of lives covered by their plans.

Actual Count method. Plan sponsors may calculate the sum of the lives covered for each day in the plan year and then divide that sum by the number of days in the year.

Snapshot method. Plan sponsors may calculate the sum of the lives covered on one date in each quarter of the year (or an equal number of dates in each quarter) and then divide that number by the number of days on which a count was made. The number of lives covered on any one day may be determined by counting the actual number of lives covered on that day or by treating those with self-only coverage as one life and those with coverage other than self-only as 2.35 lives (the “Snapshot Factor method”).

Form 5500 method. Sponsors of plans offering self-only coverage may add the number of employees covered at the beginning of the plan year to the number of employees covered at the end of the plan year, in each case as reported on Form 5500, and divide by 2. For plans that offer more than self-only coverage, sponsors may simply add the number of employees covered at the beginning of the plan year to the number of employees covered at the end of the plan year, as reported on Form 5500.

Special rules for HRAs. The plan sponsor of an HRA may treat each participant’s HRA as covering a single covered life for counting purposes, and therefore, the plan sponsor is not required to count any spouse, dependent or other beneficiaries of the participant. If the plan sponsor maintains another self-insured health plan with the same plan year, participants in the HRA who also participate in the other self-insured health plan only need to be counted once for purposes of determining the fees applicable to the self-insured plans.

About the Author. This alert was prepared for Benefit Advisors Network by Stacy Barrow. Mr. Barrow is a nationally recognized expert on the Affordable Care Act. His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm. He can be reached at sbarrow@marbarlaw.com.

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Dress Codes: Designing, Implementing, and Enforcing.

Posted on May 2, 2019May 2, 2019 by Bobbi Kloss, BAN Director of Human Capital Management

There was a time, and still suggested today, when it was advised to dress for the position you wanted, not the one you were in. Dress codes were and still are about empowerment―but the question is, whose empowerment?

Traditionally, dress code policies were designed to set white collar apart from the blue-collar worker, the executive from the administrative staff. They were individualized to the industry one was in or to distinguish the workers from the industry being served (retail, hospitality). Policies focused
their objective on a definition of professionalism that related the clothes to the business attitude of trustworthiness and reliability.

Today, it is still about empowerment. Aligning with the DNA of the generation(s) that employers are focusing on attracting and retaining, dress codes established today focus on setting that individual company culture. Take for example the “dress appropriately” dress code policy at General
Motors. Such dress code policies allow for the actions of the company, its product, and the service-minded ethics of the workforce to exemplify reliability and the attire of the personnel then become about relatability. What becomes created is a culture where supervisors and employees are empowered to think for themselves in determining what is appropriate to wear to work and for them to come together to provide viable solutions when challenges present themselves.

The relaxation of today’s dress codes also allows for more personal expression advancing the forms that diversity in the workforce can take. Whereas men’s haircuts may be longer, non-existent, bolder colors in women’s hair, tattoos, large, bulky jewelry, transgender employees, religious customs, and generational norms, are just a few of the consideration’s employers are looking at within the make-up of the workforce. For many companies, the line being drawn is focused on what
is not distracting or disruptive to the workplace and what falls within non-discrimination guidelines.

In some industries, i.e. tech and marketing companies, the CEO now may be hard to tell apart from the staff. With today’s entrepreneurial-minded generations moving quicker up the corporate ladder, they are the dress code trendsetters versus what may be considered the “suppressed” (ties, dresses, pantyhose, etc.) dress code of the prior generations.

There even seems to be less “casual Fridays,” as every day is business casual or casual. In addition, having the ability to work remotely from home also promotes an unmonitored dress code. Remember the bunny slippers commercial?

In designing or updating dress code policies for today, and as in any policy development, Human Resources needs to define the objective of the dress code. What is the message the company wants to convey to its employees and the customers it represents? Some dress codes are meant to send a
message about the company’s image or style―think about a trendsetting salon or restaurants… [Read the full article]

Written by Bobbi Kloss, Benefit Advisors Network Director of Human Capital Management Services, published in Entertainment Human Resources Network.

Employee Benefit Plan Review

Posted on March 4, 2019July 15, 2019 by Perry Braun

Written by Perry S. Braun, Benefit Advisors Network’s Executive Director. Published in Employee Benefit Plan Review, March/April 2019 issue.

What Can Employer Sponsored Benefit Plans Expect from a Divided Federal Government?

While much of the focus in 2018 came down to the elections, we now have those results and can begin moving forward. But, with a divided Congress what will the impact be on the insurance marketplace, the healthcare delivery system, the advisors and employers that interact (plan, strategize, implement, and execute) and most importantly, the employees that participate in the employer sponsored benefit plan?

Policies: What to Expect
Following the Kavanaugh hearing Senator Jeff Flake commented that he would have voted differently regarding the Federal Bureau of Investigation inquiry if he was running for re-election. This comment paints a picture that our representatives to Congress are concerned with advancing policies that secure their re-election rather than the wellbeing of the constituents they represent. With that backdrop, the status quo will be the likely outcome with regard to the current state of the Affordable Care Act (ACA) and America’s Health Insurance Plans (AHIP) until the 2020 election.

Are there policies/regulations that the parties could agree on? There are two observations assuming any policy change will support two goals – re-election and benefit to their constituents.

One, if there is any change in policy, it could be in a bipartisan approach to address prescription drug cost and the impact of prescription drugs on the health and safety of the community. The national discussion around opioids, the increase in drug prices on certain medications, as well as the lack of generic equivalents are issues that both parties wish to address from a policy perspective.

However, this represents a change on the margins and not a repeal of the program offered through President Obama or the alternative program offered by President Trump. Further, an incremental approach will not have any true and meaningful impact on the cost of healthcare – which is supposed to be the focus. Rather, the focus will be on insurance or premium reform.

The second observation is that while the focus has been on health and healthcare policy – which is really a tremendous amount of energy and no action – there is not an equal amount of attention being given to regulations for employers and advisors to meet, which come with real economic consequences, for example, fines and penalties.

The Next Two Years
So, with no one party in control of Congress and the executive branch, what does the next two years look like? Likely, the parties will be eyeing the 2020 presidential election and one of the key topics will be what the social contract with America looks like.

For example, the “crushing” national debt, cost of healthcare cost, the cost of tuition and the educational debt, and income disparity and burden this has on the vast majority of individuals in this country will push political parties to renew calls to address this situation, 2 March/April 2019 Employee Benefit Plan Review however, their energy to tackle this and their solutions will greatly differ.

The debate may focus on one or more of the following strategies to win over the hearts and minds of the voting public – raise tax revenues, cut government costs, or a combination of both.

If raising tax revenues is chosen, the impact on the individual is important. It is certain that all taxpayers will need to contribute some amount of tax revenue to buy down the debt. But, with the median household income hovering right around $60,000 and the average American household carrying $137,000 in debt, the problem becomes pretty clear: most people are not… [read more]

Industry Predictions for the New Year

Posted on February 4, 2019February 4, 2019 by Perry Braun

Written by Perry Braun, Benefit Advisors Network, and Lisa Allen, Relph Benefits, for America’s Benefit Specialist.

The tail end of 2018 saw the majority of the country focused on the mid-term elections, and with good reason. Those results will impact not only the political landscape, but also every business, organization and individual in the U.S. The impact will be felt in 2019 and beyond. The mid-term elections left us with a divided Congress, with many now asking, “What will the impact be on the insurance marketplace, the healthcare delivery system, the advisors and employers and—most important—the employees that participate in the employer-sponsored benefit plan?”

Culture vs. Discrimination in the Workplace

Posted on August 28, 2018August 28, 2018 by Bobbi Kloss, BAN Director of Human Capital Management

“Employee turnover at all-time highs.” “Lowest unemployment rates in 18 years.”

Discrimination in the Workplace vs. Culture, do these headlines sound familiar? They should, as they have dominated the business news media and the Human Resources forums for the past year. The facts behind these headlines are a reflection of the challenges that all employers are having in their ability to attract and retain employees, including 3.9% unemployment rate; employee turnover 35% times more than previous generations; and compensation and benefits the third most important aspect of what attracts Millennials.

These converging forces of a tight labor market and generational influences has left the challenge of competing for candidates keeping HR up at night. Savvy employers know that they need to change their strategies in order to be considered an employer of choice. The tactic of only offering a competitive compensation and comprehensive benefit package is outdated. The candidates are now driving the interview asking, “Why should I work here?” Employers need to show how they elevate themselves above (or at least equal to) the competition with innovation, teamwork, career progression, holistic wellness and being technology driven. These are the faces of the culture that are…[continue reading]

The article above was written by Bobbi Kloss and featured in Los Angeles Advertising Human Resource Professionals and on the Entertainment Human Resources Network.

Bobbi Kloss is the Director of Human Capital Management Services for the Benefit Advisors Network, a national network of independent employee benefit brokerage and consulting companies. For more information, please visit: benefitadvisorsnetwork.com or email the author at
bkloss@benefitadvisorsnetwork.com.