Annual Contribution Limit for Calendar Year 2014: 

Single:     $3,300 (increased from $3,250)

Family:     $6,550 (increased from $6,450)

High Deductible Health Plan Benefits Parameters: 

Minimum Deductible

Single:     $1,250 (no change)

Family:     $2,500 (no change)

Maximum Out-of-Pocket

Single:     $6,350 (increased from $6,250)

Family:     $12,700 (increased from $12,500)

Source: http://www.irs.gov/pub/irs-drop/rp-13-25.pdf

     To join the conversation, visit the Pittsburgh Health Care Reform section of our LinkedIn Page.

Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company's needs.  This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.

Contributor:

Shari Herrle

Director of Compliance 

To download the PDF version of this EXPERT UPDATE, please click on the link below:

• IRS Releases 2014 Figures for Health Savings Accounts (HSAs)

The Fees

Insurers are responsible for remitting the fees for "specified health insurance policies" while plan sponsors of "applicable self-insured health plans" are responsible for calculating and paying the PCORI fees.  The chart below identifies who is responsible for reporting and remitting the fees:

Annual Fee Schedule

Plan years* ending October 1, 2012 – September 30, 2013:          $1 Per Member for Year

Plan years* ending October 1, 2013 – September 30, 2014:          $2 Per Member for Year

Plan years* ending October 1, 2014 up to September 30, 2019:    Not determined yet

*Policy years when health plan is fully insured

When to Remit PCORI Fees

As communicated in a previous HBI compliance update, the Patient Centered Outcomes Research Institute fee is due by July 31, 2013 for plan years that ended on or after October 1, 2012 and before January 1, 2013.  The annual fee due by July 31, 2013 is $1 per plan member.  Plan years ending January 1, 2013 through September 30, 2013 will owe their first $1 per member fee by July 31, 2014.  For all plans the second year fee increases to $2 per member, and then it is adjusted each year thereafter based on increases in the projected per capita amount of national health expenditures.  The fee ends in 2019. 

Preparing for First Payment

If you are a plan sponsor and one or more of the accident or health plans you provide is a self-insured arrangement with a plan year that ended sometime during fourth quarter 2012, now is the time to evaluate the different methods available for calculating the fees.    The final regulations do not permit third-party reporting or payment of the fees, therefore, plan sponsors are required to remit fees directly to the IRS. 

Reporting of the Fees on IRS Form 720

The fees are to be reported and paid once a year even though they are reported on an IRS Form 720 which is a Quarterly Federal Excise Tax Return form.  

Plans and Benefits Subject to the Fees

A "specified health insurance policy" or "applicable self-insured health plan" is an accident or health program designed or issued to cover individuals residing in the U.S.The regulations indicate that an insurance policy or self-insured plan that covers retirees and COBRA participants is subject to the fees, as well.  

A Health Reimbursement Arrangement (HRA) that is designed to reimburse employees for certain out-of-pocket health plan expenses, like deductibles, coinsurance, co-pays, etc. consists of a promise by an employer to reimburse qualified medical expenses. As a result of this commitment to reimburse health expenses, this type of HRA is subject to the PCORI fees.  A health Flexible Spending Account (health FSA) that receives contributions from the employer is also subject to the fees.  Both the HRA and FSA described above are labeled as "non-excepted" account-based spending accounts and both are considered self-insured group health plans.

Plans that are not Subject to the Fees

The fees do not apply to an insurance policy or self-insured plan where the facts and circumstances show that the plan was designed or the policy was issued specifically to cover primarily employees who are working and residing outside theUnited States(i.e., Expatriate health plan).

Most EAPs, disease-management and wellness programs are also exempt unless they provide "significant" benefits in the nature of medical care or treatment.  Further guidance would be welcome since "significant" has not been clearly defined with respect to medical care and treatment. 

We have provided a chart below that summarizes the benefit plans NOT subject to the PCORI fee:

Calculating Fees for Sponsors of Self-Insured Plans

The regulations provide plan sponsors with self-insured plans an option to use any of three different counting methods. Although a plan sponsor may only apply one single method in determining the average number of lives covered under the plan for the entire plan year, it is not required to use the same method from one plan year to the next.

Actual Count Method

Plan sponsors may determine the average number of members (total lives) covered under the plan for the plan year by calculating the sum of the lives covered for each day of the plan year and dividing that sum by the number of days in the plan year. This method is called the "actual count method". 

Snapshot Method 

Plan sponsors may also determine the average number of lives covered under the plan for the plan year by adding the totals of lives covered on a date during the first, second, or third month in each quarter, or an equal number of dates for each quarter, then dividing that total by the number of dates on which a count was made.

This is called the "snapshot method".  The regulations do not require that a specific date be used for each month or quarter, but do provide specific rules to ensure that similar dates are used each month (i.e., dates used in each quarter should be within 3 days of the other dates used).

In addition, there are two methods within the snapshot method to count family members. One method, the "snapshot count method", requires the plan to count the actual number of lives covered on the designated date.  For plan sponsors that have the capability to run a report that captures actual covered members, this appears to be the simplest approach. The other method, the "snapshot factor method", allows the plan to count the number of participants with self-only coverage on the designated date, plus the number of participates with coverage other than self-only coverage on the designated date multiplied by 2.35.

Form 5500 Method

The third option, the "Form 5500 method", permits plan sponsors to determine the average number of lives covered under the plan for the plan year based on a formula that includes the number of participants actually reported on the Form 5500 for the plan year.  A plan sponsor only may use this method if the Form 5500 is filed no later than the due date for the fee imposed for that plan year.  Under this method, the total number of lives is determined by simply adding the total participant counts at the beginning and end of the year and dividing by 2 for a plan that only offers single coverage. If a plan offers single coverage along with other coverage (e.g., family coverage), the total number of lives is determined by adding the total participant counts at the beginning and end of the year (without dividing by 2).

Important Note:  While it makes sense for employers to use this method if they have more than 2 members covered per contract, it probably does not make sense to use this method if the employer wraps all ERISA plans into one single 5500 filing (i.e., "wrap Plan" or "mega-wrap Plan"). This is because generally the employer reports the life insurance participants in the wrap filing, not the health plan participants. In many cases there are more participants in a company paid life plan than there are in a contributory health plan.  

Counting for Account-based Plans

Stand-alone plans -If a plan sponsor does not establish or maintain an applicable self-insured health plan other than a non-excepted health FSA or HRA, the plan sponsor may treat each participant's health FSA or HRA as covering a single life (spouses and dependents are not counted).  This means that the plan sponsor is not required to include dependents as "lives" under these plans, but instead, only is required to count the employee – i.e., "one life per participant rule"

HRAs integrated with insured coverage - If a plan sponsor has other coverage, but that coverage is fully insured, the plan sponsor generally must remit the PCORI fees with respect to the average number of lives covered by the HRA in addition to the fees that will be paid for the insured plan by the insurer. The HRA's covered lives will be determined using the "one life per participant rule". (Note, however, that the plan sponsor may disregard the lives covered solely under the fully insured option when counting the number of lives for HRA purposes.)

HRAs integrated with self-funded coverage. - If the same plan sponsor has another applicable self-insured health plan with the same plan year, then each person covered by both plans is only counted once. The individuals covered by both plans are counted using the counting method for the other applicable self-insured health plan (Form 5500 method, Actual Count, Snapshot).  The one life per participant rule does not apply to this self-insured health plan package.  Please note however, that if the HRA covers anyone who is not also covered under the other plan, the sponsor must pay the fee for those individuals using the one life per participant rule.

Special Transition Rules

The final regulations permit a plan sponsor of an applicable self-insured health plan to use any reasonable method to determine the average number of lives covered under an applicable self-insured health plan for a plan year that began before July 11, 2012 and ended on or after October 1, 2012. 

Example: Plan year January 1, 2012 – December 31, 2012.  Because this plan year began before July 11, 2012 and ended on or after October 1, 2012, the plan sponsor can use any reasonable method for determining the average number of covered lives on the plan for the first PCORI fee payment, due by July 31, 2013. 

Example: Plan year August 1, 2012 – July 31, 2013.  Because this plan did NOT begin before July 11, 2012, this self-insured plan sponsor must rely on one of the three counting methods summarized previously.  This plan sponsor does not need to remit its first annual $1 per member fee until July 2014.

Resource: http://www.hcaa.org/pdfs/Legislative/PPACA_ADMINISTRATORS_710.pdf

     To join the conversation, visit the Pittsburgh Health Care Reform section of our LinkedIn Page.

Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company's needs.  This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.

Contributor:

Shari Herrle

Director of Compliance 

To download the PDF version of this EXPERT UPDATE, please click on the link below:

• Health Reform's PCORI Fees

To join the Pittsburgh Health Care Reform group, log into LinkedIn and search for the group under the "Groups" tab, then click "Join." Please feel free to join the conversation and follow Henderson Brothers on all of our social media platforms. Our hope is that everyone will be able to share in some engaging conversation and obtain a sense of how fellow professionals are adjusting to the changing landscape of Health Care and Employee Benefits. In addition, if you would like to receive (or continue to receive) more technical guidance from Henderson Brothers, then please look for our Expert Updates on www.hendersonbrothers.com/blog or contact us at consultative@hendersonbrothers.com.

     To join the conversation, visit the Pittsburgh Health Care Reform section of our LinkedIn Page.

Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company's needs.  This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.

Contributor:

Chris Shipley

Employee Benefits Consultant 

What Employers are Required to Distribute the Notices?

Employers that are subject to the Fair Labor Standards Act (FLSA) must distribute the Marketplace notice.  This means that even small employers, those who are not subject to the Employer Shared Responsibility (Play or Pay) provision of health reform, are obligated to distribute a notice as well. 

When to Distribute

The DOL has indicated that notices must be automatically provided to all current full-time and part-time employees no later than October 1, 2013. New hires with start dates beginning on or after October 1, 2013 must be provided the notice and it must be given to the employee within 14 days following the first day of employment. 

The Notices

Notice for Employers that do not offer Group Health Coverage

This particular notice has been designed to communicate a brief description of the Marketplace, information about the website and enrollment application. The notice also contains employer contact information and a statement that the notice recipient is not eligible for employer-sponsored coverage.

Notice for Employers that offer Group Health Coverage

This longer version of the notice provides all the information identified above and it also includes specific details about the employer's health plan, including who is eligible and whether the plan meets the minimum value and affordability standards.  This version also includes an optional section that employers can complete that mirrors the Employer Coverage Tool that is included in the Marketplace enrollment application. Although this last section of the notice is optional for employers, the DOL suggests that plan sponsors take the time to complete this portion of the form to ensure employees understand their coverage choices.  The more information that is provided at the time the notice is distributed the greater the likelihood employees will understand their options.  This means less phone calls and emails to Human Resources from confused employees. 

Optional Section for Employers to Complete

Assistance from Henderson Brothers, Inc.

Our staff recognizes how important it is to educate employees properly of their options.  Most employers will continue to offer group health coverage and the majority will be able to provide a health plan that meets the minimum value and affordability requirements, and as a result, the majority of employees will find very little value in the Marketplace options.  For most individuals, the Exchange will provide less benefit at much greater cost.  Our staff will work hard to make sure our clients are able to get that message across this fall. 

DOL Technical Notice: 

http://www.dol.gov/ebsa/newsroom/tr13-02.html

Model Notice for Employer with no health plan:

http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

Model Notice for Employer that provides a group health plan:

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

     To join the conversation, visit the Pittsburgh Health Care Reform section of our LinkedIn Page.

Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company's needs.  This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.

Contributor:

Shari Herrle

Director of Compliance 

To download the PDF version of this EXPERT UPDATE, please click on the link below:

• DOL Releases Guidance and Model Notices for the Health Insurance Marketplace 

Employer Obligations

Fully-insured Plans

The impact of HIPAA's Privacy and Security Rules on fully-insured plan sponsors is fairly minimal, provided that the plan sponsor does not create or receive any protected health information other than "summary health information" or enrollment information.   Employers that meet this criteria are not  covered entities, therefore, do not generally need to appoint a privacy officer, distribute a privacy notice and adopt a formal privacy policy.  They also are not directly impacted by the HITECH regulations and will not need to execute business associate contracts. 

Self-insured Plans

Self-insured group health plans are "covered entities" under HIPAA's Privacy and Security Rules.   Employers who sponsor a self- insured comprehensive medical, dental or vision plan, health FSA or health reimbursement arrangement (HRA), etc... must comply with HIPAA privacy and security regulations, including the HITECH regulations.  These plan sponsors must make certain that a business associate contract is properly executed with all service providers associated with the plan.   Plan sponsors of self-insured health plans will want to make sure that a compliant business associate contract is in place with the claims administrator (TPA), broker or consultant and other service providers.  

Contracts that Qualify for the Transition Period

The information below will help you to determine whether your business associate contracts qualify for transition relief:

• Determine whether the business associate contract was in place prior to January 25, 2013.

The additional transition period is available only if the parties had a written business associate contract in place before January 25, 2013, and that business associate contract complied with the privacy and security requirements that were in effect at that time.

No transition period is available if a business associate contract was not in place before January 25, 2013. A compliant contract must be in place by the general compliance date of September 23, 2013.

• Determine whether the business associate contract must be renewed or modified between March 26, 2013 and September 23, 2013. 

The additional transition period is available only if the contract does not need to be renewed or modified in the six month period following March 26, 2013.  Contracts that are not renewed or modified between March 26, 2013 and September 23, 2013 will be considered compliant for the transition period. 

No transition period is available if the contract is modified or renewed between March 26, 2013 and September 23, 2013, therefore, the contract will need to be compliant by the general compliance date of September 23, 2013.

A business associate contract that qualifies for transition relief does not have to be amended or modified to comply with the 2013 final regulations until the earlier of (a) the date it is renewed or modified, or (b) September 22, 2014.

Evergreen Contracts

Many business associate contracts that have been executed are what we call "evergreen" contracts.  These contracts renew automatically without any action by the parties involved.  The preamble to the final regulations indicates that HHS intended that these contracts would be eligible for the additional transition period.

It is important to understand that the transition period applies to the contracts (documentation) only.  All parties are required to comply with the HITECH final regulations by the compliance date of September 23, 2013. 

What Is a "Business Associate?

A "business associate" is a person or entity that performs certain functions or activities that involve the use or disclosure of protected health information on behalf of, or provides services to, a covered entity. A member of the covered entity's workforce is not a business associate. A covered health care provider, health plan, or health care clearinghouse can be a business associate of another covered entity. The HIPAA Privacy Rule lists some of the functions or activities, as well as the particular services, that make a person or entity a business associate, if the activity or service involves the use or disclosure of protected health information. The types of functions or activities that may make a person or entity a business associate include payment or health care operations activities, as well as other functions or activities regulated by the Administrative Simplification Rules.

Business associate functions and activities include: claims processing or administration; data analysis, processing or administration; utilization review; quality assurance; billing; benefit management; practice management; and repricing.  Business associate services are: legal; actuarial; accounting; consulting; data aggregation; management; administrative; accreditation; and financial.  See the definition of "business associate" at 45 CFR 160.103.

Examples of Business Associates

• A third party administrator that assists a health plan with claims processing.
• A CPA firm whose accounting services to a health care provider involve access to protected health information.
• An attorney whose legal services to a health plan involve access to protected health information.
• A consultant that performs utilization reviews for a hospital.
• A health care clearinghouse that translates a claim from a non-standard format into a standard transaction on behalf of a health care provider and forwards the processed transaction to a payer.
• An independent medical transcriptionist that provides transcription services to a physician.
• A pharmacy benefits manager that manages a health plan's pharmacist network.

The Next Steps

Henderson Brothers, Inc. benefit consultants and analysts will be working with self-insured plan sponsors to make sure that a business associate agreement is executed between Henderson Brothers, Inc. and their plan(s).  Although HBI staff will assist with this process, it is important to understand that self-insured plan sponsors are ultimately responsible for making certain a compliant business associate contract is completed and on file for every service provider involved with the administration of their plans. 

     To join the conversation, visit the Pittsburgh Health Care Reform section of our LinkedIn Page.

Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company's needs.  This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.

Contributor:

Shari Herrle

Director of Compliance 

To download the PDF version of this EXPERT UPDATE, please click on the link below:

• HITECH Final Rule Business Associate Contract Changes