Do you feel like you are paying too much for health insurance?

We can help! Clark & Associates and Solutions At Work teamed up to offer Professional Employer Organization (PEO) solutions to give business owners like you not just administrative relief, but also comprehensive employee benefits.

What does a Nevada PEO have to do with health insurance? PEOs are able to group their clients together, which gives them greater buying power for employee benefits and workers’ compensation insurance. They can negotiate on behalf of their clients, collectively.

Other benefits business owners can get when they join a Nevada PEO include:

  • 401K, FSA
  • Employee Enrollment & Termination Assistance
  •  HR Compliance and Support
  • Large Group Benefits and Rates for Small Businesses
  • Payroll Services
  • Recruitment/ Job Placement
  • Time Keeping
  • Workers’ Compensation

Want to learn more? Check out our Professional Employer Organization infographic.

Know Your Benefits: Understanding Voluntary Benefits

You know the importance of having health care coverage and a 401(k), but are you taking full advantage of all the benefits? Voluntary benefits are additional benefit options offered through the company. Unlike traditional benefits like Nevada health insurance, employees are responsible for paying most or all of the cost of these voluntary options.

What’s the Advantage?
You may wonder, if you’re responsible to pay, then why elect any voluntary benefits? There are several advantages:

  • Lower Price. If the benefit in question is something you are planning to purchase for yourself regardless, then it is probably more cost-effective to purchase through. The group rate we can secure is generally lower than what you’d pay buying individually from an insurance company.
  • Convenience. When you elect a voluntary benefit option through our open enrollment, your premium is paid through convenient payroll deductions just like your other benefits (and you receive the same benefit of pre-tax payroll deductions). Plus, you can skip the hassle of shopping around to find and purchase a plan – simply elect what you need during enrollment time.
  • Protect Yourself and Your Family. Many of these types of insurance may seem unnecessary, but they are designed to protect you in the event of an unexpected illness, accident, death or other event. For instance, you may be skeptical about needing disability insurance, but consider if you could afford to be disabled and without a paycheck for weeks or months, plus having medical bills to pay? Paying a small premium now can help protect you financially.

Common Types
There are a variety of voluntary benefit options; some of the common ones include:

  • Life Insurance – employees can typically elect up to a certain amount without needing to go through medical underwriting
  • Vision Insurance – typically includes free annual eye exam and discounts on glasses and contacts
  • Dental Insurance – generally covers preventive services and offers a discount on other treatments
  • Long-Term Care Insurance – covers the care people need when they have lost the ability to perform certain daily activities (care that may not be covered under Medicare or Medicaid)
  • Short-Term Disability – covers a percentage of lost pay due to time away from work because of a disability, generally up to three or six months
  • Long-Term Disability – covers care needed over a longer period of time, for injuries that could affect someone for years
  • Accidental Death & Dismemberment – coverage in case an employee dies in an accident or loses a limb, vision or hearing.

Please call at 775-828-7420 or leave Clark & Associates a message to get more information on offering voluntary benefits to your employees.

Download the full document.

HR Insights: Marijuana in the Workplace

Marijuana, derived from the Cannabis sativa plant, is classified as a Schedule I substance under the Controlled Substances Act, indicating it has a high potential for dependency and no accepted medical use. Although isolated components of the raw marijuana plant have recognized medicinal uses, smoking marijuana has not passed the Food and Drug Administration’s rigorous research and testing process to become an approved medicine.

Marijuana contains psychoactive chemicals, and the main active chemical is delta-9-tetrahydrocannabinol (THC). Distribution of marijuana is a federal offense, and it is the most commonly used illicit drug in the United States.

Legal Status of Marijuana Use

Although marijuana use violates federal law, many states have passed laws allowing marijuana in various amounts and contexts. Restrictions vary widely by state; some states only allow medical marijuana, while others have legalized recreational marijuana. Various state laws may do one of the following:

  • Legalize medical marijuana, meaning an individual may defend against criminal charges if he or she can prove a medical need for marijuana under state law
  • Legalize the possession and use of recreational or medical marijuana
  • Decriminalize marijuana, meaning penalties for possession and use of small amounts of marijuana may be reduced

In 1996, California became the first state to legalize medical marijuana. Since then, 23 states and the District of Columbia have also legalized medical marijuana. However, only a few states have legalized recreational marijuana use. As of November 2014, Colorado, Washington, Alaska and Oregon have passed laws allowing recreational marijuana.

Download the Full Document on Marijuana in the Workplace

Inviting All Large Group Employers: Seminar on ACA Employer Reporting Forms for 2015

Clark & Associates of Nevada, Inc. invites all our Over 50 Employee Groups to attend the workshop on the Affordable Care Act Employer Reporting Forms for 2015, on January 27, 2015. The event will give you thorough step-by-step guidance on filing accurate and timely reports.

On the agenda:

  • What is the deadline to file the reports?
  • Which reports must be filed by employers with insured health plans?
  • Which reports must be filed by employers with self-insured health plans?
  • What information is required for each report and each individual statement?
  • What is a “qualified offer” that will allow simplified reporting?
  • If an employer offers minimum value coverage to at least 98% of its full-time employees, what simplified reporting method applies?
  • What are the penalties for inaccurate filings or failure to file?
  • Are there any penalty relief provisions?
  • AND MUCH MORE!

Sponsored by the Nevada Business Group on Health (NVBGH). This event is free for NVBGH members, and they have offered a discounted rate of $25.00 (includes meal) for guests of Clark & Associates. Regular price for this program is $50.00.

Save the date, everyone, and see you at the workshop! Download the PDF flyer.

ACA WORKSHOP - JANUARY 27 - SAVE THE DATE

Employer Reporting of Health Coverage—Code Sections 6055 & 6056

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees. The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.

On March 5, 2014, the Internal Revenue Service (IRS) released two final rules on these reporting requirements.

  • The section 6055 final rule requires health insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to report information on that coverage to the IRS and covered individuals. This rule finalizes proposed regulations issued on Sept. 5, 2013.
  • The section 6056 final rule requires applicable large employers (ALEs) subject to the pay or play rules to report to the IRS and covered individuals information on the health coverage offered to full-time employees. This rule finalizes proposed regulations issued on Sept. 5, 2013.

Download the full article: HCR Employer Reporting of Health Coverage – Sections 6055 and 6056

Paying Premiums for Individual Health Insurance Policies Prohibited

Due to the rising costs of health coverage, some employers have considered helping employees pay for individual health insurance policies instead of offering an employer-sponsored group health plan. In response, on Sept. 13, 2013, the Internal Revenue Service (IRS) issued Notice 2013-54 to address how the market reforms under the Affordable Care Act (ACA) apply to health reimbursement arrangements (HRAs), cafeteria plans, and other employer payment plans. Also, on May 13, 2014, the IRS issued two FAQs clarifying the consequences for employers that reimburse employees for premiums they pay for individual health insurance.

Finally, on Nov. 6, 2014, the Departments of Labor (DOL), Health and Human Service (HHS) and the Treasury (Departments) issued additional FAQ guidance clarifying that these arrangements do not comply with the ACA’s market reforms and may subject employers to penalties. Although it was widely believed that these penalties would apply only to pre-tax arrangements, the FAQs clarify that after-tax reimbursements and cash compensation for individual premiums also do not comply with the ACA’s market reforms and may trigger the excise tax penalties.

This guidance essentially prohibits all employer arrangements that reimburse employees for individual premiums, whether employers treat the money as pre-tax or post-tax for employees.

Health Reimbursement Arrangements

HRAs have been used by employers to help employees pay for the cost of individual insurance policies on a tax-free basis. Unlike health flexible spending accounts (FSAs) and health savings accounts (HSAs), HRAs can be used to reimburse health insurance premiums. Also, unlike an HSA, an individual does not need to be covered under a high-deductible health plan (HDHP) to participate in an HRA. This has made HRAs particularly compatible with individual health insurance policies.

Notice 2013-54 addresses how the ACA’s market reforms apply to HRAs, including HRAs that are not integrated with other group health coverage, or “stand-alone” HRAs. An HRA used to purchase coverage on the individual market cannot be integrated with that individual coverage, and is considered a stand-alone HRA. Some stand-alone HRAs are not subject to the ACA’s market reforms because they fall under an exception, such as retiree-only HRAs. However, beginning in 2014, stand-alone HRAs that do not fall under an exception will not be permitted due to the ACA’s annual limit prohibition and preventive care requirements.

Thus, effective for 2014 plan years, employers will not be able to offer a stand-alone HRA for employees to purchase individual coverage, inside or outside of an Exchange, without violating specific provisions of the ACA and risking exposure to severe financial penalties.

Employer Payment Plans

In Revenue Ruling 61-146, the IRS provided that if an employer reimburses an employee’s substantiated premiums for non-employer sponsored hospital and medical insurance, the payments are excluded from the employee’s gross income under Internal Revenue Code (Code) section 106. This IRS guidance allowed an employer to pay an employee’s premiums for individual health insurance coverage without the employee paying tax on the amount.

Notice 2013-54 referred to this type of arrangement as an “employer payment plan.” An employer payment plan appears to also include any tax-advantaged arrangement to pay for individual health insurance premiums, including employee pre-tax salary reduction contributions paid through a cafeteria plan.

Similar to the guidance for HRAs, Notice 2013-54 provides that an employer payment plan that reimburses employees for their individual insurance policy premiums will not comply with the ACA’s annual limit prohibition and preventive care requirements. Thus, effective for 2014 plan years, these plans will essentially be prohibited.

On May 13, 2014, the IRS issued FAQs addressing the consequences for employers that do not establish a health insurance plan for their own employees, but instead reimburse those employees for premiums they pay for health insurance (either through an Exchange or outside of an Exchange). Because these employer payment plans do not comply with the ACA’s market reforms, the IRS indicated in the FAQs that these arrangements may be subject to an excise tax of $100 per day for each applicable employee ($36,500 per year, per employee) under Code section 4980D.

The Departments’ prior guidance suggested that an employer payment plan does not include an employer-sponsored arrangement that allows an employee to choose either cash or an after-tax amount to be applied toward health coverage. Thus, it was widely believed that premium reimbursement arrangements made on an after-tax basis would generally still be permitted.

However, FAQ guidance issued on Nov. 6, 2014, clarified that after-tax reimbursements and cash compensation for individual premiums also do not comply with the ACA’s market reforms and may trigger the excise tax penalties. This guidance essentially prohibits all employer arrangements that reimburse employees for individual premiums, whether employers treat the money as pre-tax or post-tax for employees.

Cash Reimbursements

According to the new FAQs, an employer arrangement that provides cash reimbursement for an individual market policy is considered to be part of a plan, fund or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax for the employee. Therefore, the arrangement is group health plan coverage subject to the ACA’s market reform provisions.

The Departments stressed that these employer health care arrangements cannot be integrated with individual market policies to satisfy the ACA’s market reforms. As a result, these plans will violate the ACA’s market reforms, which can trigger penalties, including excise taxes under Code Section 4980D.

Employees with High Claims Risk

The FAQs also clarify that an employer cannot offer a choice between enrollment in the standard group health plan or cash only to employees with a high claims risk. This practice constitutes unlawful discrimination based on one or more health factors, in violation of federal nondiscrimination laws.

Although employers are permitted to have more favorable rules for eligibility or reduced premiums or contributions based on an adverse health factor (sometimes referred to as benign discrimination), the Departments assert that offering cash-or-coverage arrangements only to employees with a high claims risk is not permissible benign discrimination.

Accordingly, these arrangements will violate the nondiscrimination provisions, regardless of whether:

  • The employer treats the cash as pre-tax or post-tax for the employee;
  • The employer is involved in purchasing or selecting any individual market product; or
  • The employee obtains any individual health insurance.

The Departments also noted that the choice between taxable cash and a tax-favored qualified benefit (the election of coverage under the group health plan) is required to be a Code Section 125 cafeteria plan. Offering this choice to high-risk employees could result in discrimination in favor of highly compensated individuals, in violation of the cafeteria plan nondiscrimination rules.

Cafeteria Plans

A Section 125 Plan, or a cafeteria plan, can be used by employers to help employees pay for certain expenses, including health insurance, on a pre-tax basis. The proposed cafeteria plan regulations from 2007 allow for the pre-tax payment or reimbursement of individual health insurance policy premiums under a cafeteria plan. However, the ACA changes this rule and now prohibits cafeteria plans from paying or reimbursing premiums for individual health insurance policies, effective for 2014.

The ACA’s prohibition on including individual health insurance policies under a cafeteria plan applies to policies purchased on an Exchange and through the private market, as follows:

  • Exchange Coverage: The ACA provides that individual health insurance offered through an Exchange cannot be reimbursed or paid for under a cafeteria plan. Exchange coverage may be funded through a cafeteria plan only if the employee’s employer elects to make group coverage available through the Exchange’s Small Business Health Options Program (SHOP).
  • Non-Exchange Coverage: Notice 2013-54 indicates that, effective for 2014, cafeteria plans may not be used to pay premiums for individual health insurance policies that provide major medical coverage. However, it appears that this restriction does not apply to individual policies that are limited to coverage that is excepted from the ACA’s market reforms, such as retiree-only coverage or limited-scope dental or vision benefits.

Thus, effective for 2014, the tax exclusion provided through a cafeteria plan is only available when group coverage is purchased. However, Notice 2013-54 provided a transition rule for certain cafeteria plans for plan years beginning before Jan. 1, 2014. For cafeteria plans that, as of Sept. 13, 2013, operate on a plan year other than a calendar year, the restriction on purchasing individual Exchange coverage through a cafeteria plan did not apply before the first plan year that begins after Dec. 31, 2013. However, individuals were not permitted to claim a subsidy for any month in which they are covered by an individual plan purchased through an Exchange as a benefit under a cafeteria plan.

Code Section 105 Reimbursement Plans

The Departments also noted in the new FAQ guidance that certain vendors are marketing products to employers claiming that, instead of providing a group health insurance plan, employers can establish a Code Section 105 reimbursement plan that works with health insurance brokers or agents to help employees select individual insurance policies allowing eligible employees to access subsidies for Exchange coverage.

The FAQs assert that these arrangements are problematic for several reasons. First, these arrangements are, themselves, group health plans. Therefore, employees participating in the arrangements are ineligible for Exchange subsidies. The mere fact that the employer is not involved with an employee’s individual selection or purchase of an individual health insurance policy does not prevent the arrangement from being a group health plan.

Second, as explained in previous guidance, these arrangements are subject to the ACA’s market reform provisions, including the annual limit prohibition and preventive care coverage requirement. As noted before, these employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, can trigger penalties, including excise taxes under Code Section 4980D.

More Information;The Department of Labor (DOL) also issued Technical Release 2013-03 on Sept. 12, 2013, which is substantially identical to IRS Notice 2013-54. In addition, the Department of Health and Human Services (HHS) issued guidance onSept. 16, 2013, to reflect that it concurs with Notice 2013-54. On Jan. 24, 2013, the DOL and HHS also issued FAQs that addressed the ACA’s application to HRAs.

Download the PDF version of the Legislative Brief

Employee Benefits Insights: Open Enrollment Education Opportunities

Open enrollment is a period of time each year when employers permit new employees to enroll in a health insurance plan and allow current employees to make changes to their existing medical coverage. During open enrollment, employees may decide to change plans, add or drop a dependent, or add an optional benefit like a dental plan.

Employers can assist employees during open enrollment by distributing materials that explain new health options and changes to existing benefits. To help employees select the plan option that best meets their needs, employers should provide information:

  • A general summary of what benefits are covered by the plan
  • Limits on coverage, as well as limits on coverage for certain conditions
  • Pre-existing condition clauses that restrict coverage for a specific period of time
  • Coverage for preventive services, procedures and medications
  • Prescription drug coverage details
  • Cost-sharing, i.e. premium contribution, deductible, copayment or coinsurance requirements
  • Consumer directed and high deductible health plans or other non-traditional plan types

The following are ways for employers to improve their open enrollment communication strategies:

  • Communicate frequently with employees regarding their health coverage options, but avoid overwhelming employees with information. Give them ample time to absorb new information, ask questions and express concerns.
  • Use simple terms to explain changes.
  • Thoroughly explain the goals and rationale of health care benefits to managers and business leaders so they can effectively explain health plans to employees.
  • Be honest and direct when discussing health benefits, especially if employees are facing cost increases for their coverage.
  • Discuss the “Five Cs” of enrollment with employees: Cost, coverage information, changes to plans, comparisons to last year’s plans and current options.
  • Provide information to employees about the health care providers or networks that will be available to them in new or revised plan options.
  • Provide testimonials from other employees about their experiences with changes in health care coverage.
  • Use a variety of communication methods, such as the Internet, printed materials and face-to-face discussions.
  • Be ready to answer questions and face challenges from employees regarding changes.
  • Some groups of employees may need additional assistance, particularly those with mental or physical disabilities, low or fixed incomes, parents of children with special needs and non-English speakers. Without special assistance, these groups may miss open enrollment periods or have large gaps in their coverage.

Article adapted with permission from the National Business Group on Health article “Primary Care and the Medical Home: Promoting Health, Preventing Disease, and Reducing Cost.” Download the PDF version or contact Clark & Associates of Nevada, Inc. for more information.

Affordable Care Act (ACA) Violations: Penalties and Excise Taxes

The Affordable Care Act (ACA) includes numerous reforms for group health plans and creates new compliance obligations for employers and health plan sponsors. The ACA, for example, requires health plans to eliminate pre-existing condition exclusions and provide coverage for preventive care services without cost-sharing. Some of the reforms for health plans apply to all health plans, while others apply only to non-grandfathered plans or to insured plans in the small group market.

Starting in 2015, the ACA requires applicable large employers (ALEs) to either provide affordable, minimum value health coverage to full-time employees or face penalties. Employers and plan sponsors must also comply with new reporting and disclosure requirements, such as the health coverage reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. In addition, the ACA imposes several taxes and fees on health plan sponsors, such as the transitional reinsurance fee and the tax on high-cost employer plans.

Failing to comply with the ACA’s requirements can cause severe consequences for an employer. The potential consequences vary depending on the ACA requirement that is involved and the nature and extent of the violation. Employers should keep these consequences in mind as they continue to work on ACA compliance.

Group Health Plan Reforms

Code Section 4980D imposes an excise tax for a group health plan’s failure to comply with certain requirements, including the ACA’s reforms for group health plans. Failing to comply with a group health plan requirement may trigger an excise tax of $100 per day with respect to each individual to whom the failure relates.

Read the full article or contact Clark and Associates Nevada for more information.

Deadline for Submitting Reinsurance Fee Enrollment Counts Extended to Dec. 5

The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-funded group health plans in order to fund a transitional reinsurance program for the first three years of Exchange operation (2014-2016). The fees will be used to help stabilize premiums for coverage in the individual market.

Entities that must pay these fees, called “contributing entities,” are generally required to submit their annual enrollment count to the Department of Health and Human Services (HHS) by Nov. 15 of each benefit year. To do this, contributing entities must register on Pay.gov and complete a contribution form for the year.

For the 2014 benefit year, the regulatory deadline for submitting the reinsurance fee contribution form is Nov. 15, 2014. An FAQ initially extended this deadline until Monday, Nov. 17, 2014, since Nov. 15 was a Saturday. However, on Nov. 14, 2014, the Centers for Medicare & Medicaid Services (CMS) further extended the regulatory deadline for contributing entities to submit their 2014 enrollment counts until 11:59 p.m. on Dec. 5, 2014. The payment deadlines (Jan. 15, 2015, and Nov. 15, 2015) remain the same.

The contribution form that will be used to submit annual enrollment counts became available Oct. 24, 2014. HHS also provided an Annual Enrollment and Contributions Submission Form Manual and a Supporting Documentation Job Aid Manual.

Contributing Entities

A contributing entity is defined as a health insurance issuer or a third-party administrator (TPA) on behalf of a self-insured group health plan. However, certain types of coverage are excluded from paying reinsurance fees.

  • Fully-insured Group Health Plans—For insured health plans, the issuer of the health insurance policy is required to pay reinsurance fees. However, issuers will likely shift the cost of the fees to sponsors through premium increases.
  • Self-insured Group Health Plans—For self-insured group health plans, the plan sponsor is liable for paying reinsurance fees, although a TPA or an administrative-services-only (ASO) contractor may pay the fee at the plan’s direction. For a plan maintained by a single employer, the employer is the plan sponsor.

However, there is a limited exception for self-insured, self-administered plans. For 2015 and 2016, the term “contributing entity” excludes self-insured group health plans that do not use a TPA for the core administrative functions of claims processing or adjudication (including management of appeals) or plan enrollment.

Deadlines

Contributing entities are required to submit their annual enrollment count to HHS, generally by Nov. 15 of each benefit year. However, because this is the first year that this process is being implemented, CMS received requests for an extension of the deadline for contributing entities to submit their 2014 enrollment counts for reinsurance contributions.

As a result, on Nov. 14, 2014, CMS extended the deadline until 11:59 p.m. on Dec. 5, 2014. This is the second deadline extension that CMS has provided for 2014 reinsurance fee enrollment counts. Because Nov. 15, 2014, was a Saturday, CMS previously stated in FAQ 5415 that contributing entities could submit the annual enrollment count by Nov. 17, 2014.

Despite this deadline extension, the payment deadlines remain the same. These fees may be paid in two installments—one at the beginning of the calendar year following the applicable benefit year, and then one at the end of that calendar year. Key deadlines for the 2014 benefit year are:

  • Dec. 5, 2014—For the 2014 benefit year, the Nov. 15 regulatory deadline for contributing entities to submit annual enrollment counts has been extended to 11:59 p.m. on Dec. 5, 2014.
  • Jan. 15, 2015—The first payment of $52.50 per covered life is payable by the regulatory deadline of Jan. 15, 2015. This payment will be allocated towards reinsurance payments and administrative expenses.
  • Nov. 15, 2015—The second payment of $10.50 per covered life is payable by the regulatory deadline of Nov. 15, 2015. This payment will be allocated towards payments to the U.S. Treasury.

Reinsurance Contribution Amounts

The reinsurance program’s fees are based on a national contribution rate, which HHS announces annually. For 2014, the annual contribution rate is $63 per enrollee per year, or $5.25 per month. For 2015, the annual contribution rate will be $44 per enrollee per year, or about $3.67 per month.

Several methods are available to determine the number of covered lives under a health plan:

  • The Actual Count Method;
  • The Snapshot Count Method;
  • The Snapshot Factor Method;
  • The Member Months or State Form Method; and
  • The Form 5500 Method.

The permitted counting method depends on whether the contributing entity is a health insurance issuer or a self-insured group health plan, and whether, in the case of a group health plan that is a contributing entity, the plan offers more than one coverage option.

The Collection Process

A contributing entity can complete all of the required steps (that is, registration, submission of annual enrollment count and remittance of contributions) on www.pay.gov. Using a contribution form, entities will provide basic company and contact information and the annual enrollment count for the applicable benefit year. The contribution form became available via www.pay.gov on Oct. 24, 2014.

The form will auto-calculate the contribution amounts. To complete the submission, entities will also submit payment information and schedule a payment date for the contributions. Supporting documentation must also be submitted through www.pay.gov with the contribution form.

More Information

HHS offers training for the pay.gov collection process. To receive notices from HHS regarding upcoming training and to review training resources, register on www.regtap.info.

HHS also provided an Annual Enrollment and Contributions Submission Form Manual, which provides step-by-step instructions for completing and submitting the contribution form and supporting documentation, details on key elements and business concepts, and resources to further assist the contributing entity. A Supporting Documentation Job Aid Manual is also available to help contributing entities create the supporting documentation.

Download the PDF version or contact Clark and Associates Nevada for more information.

Paying PCORI Fees: Corrections and Amendments

The Affordable Care Act (ACA) imposes fees to fund comparative effectiveness research on health insurance issuers and self-funded plan sponsors. These fees are widely known as Patient-Centered Outcomes Research Institute fees (PCORI fees), although they may also be called PCOR fees or comparative effectiveness research (CER) fees.

On Dec. 5, 2012, the Internal Revenue Service (IRS) issued final regulations on the PCORI fees. On May 28, 2013, the IRS released an updated Form 720 that includes a section where issuers and plan sponsors will report and pay the PCORI fee. The IRS also released updated instructions along with the revised form.

OVERVIEW OF THE PCORI FEES
The PCORI fees apply for plan years ending on or after Oct. 1, 2012, but do not apply for plan years ending on or after Oct. 1, 2019. For calendar year plans, the fees will be effective for the 2012 through 2018 plan years. Issuers and plan sponsors will be required to pay the PCORI fees annually on IRS Form 720 by July 31 of each year. It will generally cover plan years that end during the preceding calendar year. Thus, the deadline for filing Form 720 was July 31, 2014, for plan years ending in 2013.

For plan years ending before Oct. 1, 2013 (that is, 2012 for calendar year plans), the fee is $1 multiplied by the average number of lives covered under the plan. For plan years ending on or after Oct. 1, 2013, and before Oct. 1, 2014, the fee is $2 multiplied by the average number of covered lives. For plan years ending on or after Oct. 1, 2014, the fee amount will grow based on increases in the projected per-capita amount of National Health Expenditures.

On Sept. 18, 2014, the IRS published the adjusted PCORI fee amount for plan years ending on or after Oct. 1, 2014, and before Oct. 1, 2015, in Notice 2014-56. For plan years ending on or after Oct. 1, 2014, and before Oct. 1, 2015, the fee is $2.08 multiplied by the average number of lives covered under the plan. This amount was calculated based on the percentage increase in the projected per capita amount of the National Health Expenditures published by the U.S. Department of Health and Human Services on Sept. 3, 2014 (Table 3). In the future, the IRS intends to publish the adjusted PCORI fee amount for plan years ending on or after Oct. 1, 2015, and before Oct. 1, 2019.

CORRECTIONS AND AMENDMENTS
The final regulations did not explicitly address whether plan sponsors may correct or amend a previously filed Form 720 if certain errors are made (for example, miscalculations related to covered lives or fee amounts due). However, they did note that the penalties related to late filing of Form 720 or late payment of the fee may be waived or abated if the issuer or plan sponsor has reasonable cause and the failure was not due to willful neglect.

In addition, plan sponsors may use Form 720X, “Amended Quarterly Federal Excise Tax Return,” to adjust liabilities reported on a previously filed Form 720, including adjustments that result in an overpayment. Form 720X and the accompanying instructions do not specifically identify or refer to the PCORI fees. However, there is space to include an explanation of adjustments, which plan sponsors can use to identify the PCORI fee.

Download the PDF version or contact Clark and Associates Nevada for more information on PCORI fees.