1. Whether you should be paying the PCORI fee on your self-insured arrangement.

Sponsors of self-insured health plans must pay a fee to help fund the Patient Centered Outcomes Research Institute (PCORI). The PCORI fee is equal to the average number of “lives covered” during the plan year multiplied by an applicable dollar amount. The annual fee applies to self-insured plans with plan years ending on or after October 1, 2012, but before October 1, 2019, and is due by July 31 each year. For 2015 calendar year plans and plan years ending on or after October 1, 2015 and before October 1, 2016, the fee is $2.17 per covered life. Employers must report and pay the fee using Form 720 by July 31, 2016.

Self-insured plans that qualify as “excepted benefits” do not need to pay PCORI fees. However, many employers do not realize that they must pay the fee for certain self-insured arrangements. The employer must pay PCORI fees for the following types of arrangements if they are self-insured (i.e. the employer assumes the financial risk for providing the benefit):

  • Major accident and health coverage
  • Retiree-only health coverage;
  • COBRA coverage;
  • Health Reimbursement Arrangement (HRA) unless it qualifies as an excepted benefit; and
  • Flexible Spending Arrangement (FSA) unless it qualifies as an excepted benefit.

If an employee is already covered by another self-insured plan for which the employer is already paying the fee on the user, then the employer will not pay the fee again on that person. In other words, the employer will not pay the fee twice on a person who may be covered under multiple plans offered by the employer. All individuals covered during the plan year must be included when calculating the “lives covered,” which includes retirees and former employees offered COBRA coverage. If you offer a self-insured arrangement, you should ensure you are correctly calculating the “lives covered” for the purposes of the PCORI fee.

2. Whether you have an employer payment plan and why it matters.

An employer payment plan is an arrangement where the employer reimburses an employee for some or all of the premium expenses upon the employee providing proof that the insurance is in force.  The ACA considers an employer payment plan a “group health plan” that must comply with the Group Health Plan (GHP) Mandates. The GHP Mandates prohibit a group health plans from placing annual and lifetime dollar limits on essential health benefits and required provision of preventive services. The structure of certain arrangements, by their nature, cannot comply with these requirements.  Two unique examples of arrangements that may lead to GHP issues are discussed below.

HRA Funds:  HRA funds cannot be used by current employees to purchase individual market coverage (e.g. Covered California) if the employee is not also covered by another integrated group health plan.  A current-employee HRA fails to be integrated with another group health plan if the amounts credited to the HRA may be used to purchase individual market coverage.  If the amounts can be used to purchase individual market coverage, the HRA will be considered a “group health plan” and will not be able to satisfy the GHP Mandates.  Employers with employer payment plans can be penalized $100 per day for each individual with respect to whom a failure occurs. Employers should review their benefit arrangements to ensure they are in compliance with the ACA’s GHP Mandates if they qualify as group health plans.

3. Whether you must provide a Summary of Benefits and Coverage and what you should include.

Group Health Plans must provide an annual summary of benefits and coverage (SBC) to participants and beneficiaries in order to help individuals better understand the coverage and compare options. Insurers provide the SBC for fully insured plans, but the plan sponsor (i.e. the employer) must provide the SBC for self-insured plans. Employers do not need to provide an SBC for retiree-only plans and only one SBC is required if an arrangement is integrated with a group health plan.  An SBC template to use before April 1, 2017, can be found here.  An SBC template to be used on or after April 1, 2017, can be found here.