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CMS Guidance: Accumulator Programs

Posted on June 23rd, 2020

WHAT IS AN ACCUMULATOR PROGRAM?
Many prescription drug manufacturers offer financial assistance (e.g. coupons) to patients in order to reduce their out of pocket costs, particularly for very expensive drugs. Standard practice is for an "accumulator program" to exclude the value of such financial assistance from counting toward a health plan enrollee’s annual "cost sharing" limit, defined to include: deductibles, coinsurance, copayments or similar charges; and any other expenditure required of an enrollee which is a qualified medical expense with respect to an essential health benefit covered under the plan. In other words, financial assistance in the form of coupons or other direct support provided by a manufacturer did not count as money spent by an enrollee toward their out of pocket maximum (OOPM or MOOP).

WHAT DOES THE FINAL RULE SAY ABOUT ACCUMULATOR PROGRAMS?
Under the final rule published in the Federal Register on  May 14, 2020, to the extent consistent with applicable state law, health plans and issuers can choose whether to count or exclude towards the annual limitation on cost sharing, any amount a participant pays using a drug manufacturer's coupon or any form of direct support offered by drug manufacturers for a specific brand-name prescription drug regardless of whether they have a medically appropriate generic equivalent available. Note, that some states (e.g. Arizona, Illinois, Virginia, and West Virginia) have insurance laws requiring in certain circumstances, the support offered by drug manufacturers be included in the participant's annual cost-sharing limit. Fully insured health plans and insurers will need to be aware of any state law restrictions, however the state laws would not apply to self-funded health plans.

This is different from the rule for 2020, which a plan could exclude the amount only if there was a medically appropriate generic equivalent available. The 2020 final rule was not enforced because of conflicting rules with IRS guidance on the requirement to disregard the manufacturer's assistance when determining if the deductible for an HDHP had been satisfied.

WHAT DOES THE FINAL RULE MEAN FOR PLAN SPONSORS?
Plan sponsors may continue to count or exclude the financial assistance provided to patients towards their out of pocket limit, whichever method is provided for in their plan documents. HHS however, encourages employers to be clear and transparent in all enrollment materials (e.g. benefit guides, plan summary descriptions) regarding whether direct drug manufacturer support amounts will or will not count towards the annual limitation on cost sharing. This information may be essential for an employee in deciding between plans.

Plan sponsors and insurers (to the extent consistent with applicable state law) have the option to count or not count prescription drug manufacturer coupons & other discounts toward cost-sharing limits regardless of whether the brand-name drug does or does not have a generic equivalent.

However, there are still unanswered questions regarding whether plan sponsors with qualified HDHPs are able to count the financial assistance toward the HDHP deductible. The IRS has previously made it clear, specifically, Q&A-9 of IRS Notice 2004-50, that an HDHP must disregard drug discounts and other manufacturer and provider discounts when determining if the deductible for an HDHP has been satisfied and does not allow these amounts to be considered towards meeting the required deductible. Also, to meet the requirements of section 223 of the Code, an HDHP may only take into account the amount the individual actually paid, not including any rebates or discounts when determining whether the individual has satisfied the deductible.

Therefore, it appears unless additional IRS guidance is issued, plan sponsors with an HDHP must exclude the value of a drug manufacturer's financial assistance to be an HSA-compatible HSA.

HOW WILL THE FINAL RULE IMPACT HEALTH PLANS?
Issuers and group health plans need not make changes on how they have historically handled direct drug manufacturer support amounts and will continue to have flexibility, subject to state law and other applicable requirements (if any), to determine if and how to factor in direct drug manufacturer support amounts towards the annual limitation on cost sharing.

EXAMPLE 1 – DO NOT COUNT THE COUPON 
Alex is an employee of BizCorp and has single-only coverage under its group health plan. The plan’s accumulator program does not count the value of any coupon toward any enrollee’s OOPM ($8150 in 2020).
Alex takes the brand-name drug Helpana (manufactured by RxPharma) for an autoimmune condition. A 30-day supply costs $6000. The plan pays $4500, leaving $1500 for Alex. Because it is so expensive, RxPharma provides a $1250 Helpana coupon.
The accumulator program will not apply the value of the coupon to Alex’s OOPM. Assuming no other expenses, Alex will pay $250/month ($3000 over a year) without reaching the OOPM limit.

EXAMPLE 2 – COUNT THE COUPON 
Same fact as Example 1, except BizCorp’s plan does not use an accumulator program. It counts any coupon used by any enrollee toward their OOPM limit. This means the entire $1,500 each month ($1,250 provided by the coupon plus the $250 paid by the employee) will be applied towards the OOPM.

For questions related to these issues, it is advisable to seek legal counsel.

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such.  Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice.  This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

Updated as of 06/22/2020.

COVID-19 Update: How Insurance Companies are Helping Consumers

Posted on June 18th, 2020

In addition to payment relief to some customers, insurance companies are maintaining staff and supporting national pandemic relief efforts.

Immediate Customer Solutions

Many insurers are offering payment relief. For example, auto insurers have returned $10.5 billion so far to customers’ pockets around the country through premium relief. Customers who need payment relief or are looking to file a COVID-19 related claim should contact their insurance professional or go to their insurer’s website to find out what options are available to them.

Despite lower premiums and higher loss expectations during the pandemic insurers are keeping employees employed and serving customers. Many insurers have pledged to make no layoffs during the ongoing crisis; and insurers are implementing innovative solutions to carrying out daily operations while respecting social distancing.

Government-Backed Solutions

Insurers support the COVID-19 Business and Employee Continuity and Recovery Fund. They have pledged more than an estimated $220 million (according to Triple-I/Insurance Industry Charitable Foundation) in donations to the national and local organizations fighting the pandemic on the frontlines. Funded by the federal government and operated by a special federal administrator, the Recovery Fund would facilitate the distribution of federal funds and liquidity to impacted businesses during this time of incalculable business interruption.

The Insurance Information Institute (Tripe-I) points out that the insurance industry in the U.S. also faces several challenges during the crisis:

•    Some lawmakers want to void policy exclusions and pay out retroactively for non-existing coverages which would threaten the solvency of some insurers. Several reasons are offered:

•    Only a handful of business interruption policies cover communicable disease contamination; very few U.S. businesses purchase: so there has been little premium generated to fund these losses

•    Rewriting contracts after they have been agreed to is unconstitutional – Article I

•    Requiring an insurer to pay for losses it never insured would cause irreparable harm to the industry

•    Mandating business interruption payouts would eliminate the surplus set aside for covered claims in a matter of months.

•    Overall insurance claims will increase. Workers compensation insurers have exposure in healthcare, among first responders, and retailers who use delivery services.

•    Insurer premium revenue will decrease. More unemployment, less manufacturing, and less economic activity overall will lead to a reduction in premiums.

•    Insurer investment income will decrease. P/C insurer investments are largely in fixed income products, yet their equity portfolios and the continued low interest rate environment will reduce insurer investment income, a key revenue source.

•    Beyond the COVID-19 pandemic, insurers are preparing for more severe natural and man-made catastrophes — tornadoes, hurricanes, wildfires, cyberattacks. These covered catastrophes continue to increase in terms of overall loss costs.

Please contact your local advisor or email us at info@aleragroup.com to be connected with a local office. You can view our COVID-19 Resource Center here. 

As HHS Finalizes Its Updated §1557 Rules, the United States Supreme Court Rules Title VII Protects Individuals From Discrimination Due To Sexual Orientation or Gender Identity

Posted on June 17th, 2020

On June 12, 2020, the U.S. Department of Health and Human Services (“HHS”) released its Final Rule under Section 1557 of the Affordable Care Act which, among other things, modifies the regulation issued by HHS in May 2016 (“2016 Rules”).  The 2016 Rules were subject to multiple lawsuits over the years and HHS claims the Final Rules, among other things, “better comply with the mandates of Congress…reduce confusion…and clarify the scope of Section 1557 in keeping with pre-existing civil rights statutes and regulations prohibiting discrimination on the basis of race, color, national origin, sex, age, and disability.” 

Just days after the Final Rule was released, the United States Supreme Court released its much anticipated opinion in Bostock v. Clayton County, Georgia regarding whether an employee’s sexual orientation or gender identity protects them from discrimination on the basis of sex under Title VII.

While these two issues are seemingly unrelated, as we discuss in this alert, we believe the Court’s decision makes the Final Rule ripe for legal challenge.  The decision also impacts employer-sponsored group health plans regardless of whether they are “covered entities” for purposes of Section 1557.

Section 1557

Covered Entities

Under prior HHS Rules (issued in 2016) Section 1557 of the ACA applied to “covered entities,” which were defined as health programs or activities that receive “federal funding” from HHS (except Medicare Part B payments), including state and federal Marketplaces.  Examples include hospitals, health clinics, community health centers, group health plans, health insurance issuers, physician’s practices, nursing facilities, as well as employers with respect to their own employee health benefit programs if the employer is principally engaged in providing or administering health programs or activities (i.e., hospitals, physician practices, etc.), or the employer receives federal funds to fund the employer’s health benefit program.

Further, group health plans themselves were subject to the rule if they received federal funds from HHS (e.g., Medicare Part D Subsidies, Medicare Advantage). In other words, employers who were not principally engaged in providing health care or health coverage generally were not subject to these rules directly unless they sponsor an employee health benefit program that receives federal funding through HHS, such as a retiree medical plan that participates in the Medicare Part D retiree drug subsidy program.

This created confusion for many employers.  Therefore, in May 2019, HHS issued a proposed rule (“Proposed Rule”) that narrowed the scope of “covered entities” regulated by Section 1557 clarifying that entities not “principally engaged in health care” are not subject to Section 1557 unless they are funded by, and only to the extent funded by, HHS.  Additionally, Entities whose primary business is providing healthcare will also be regulated if they receive federal financial assistance.

Consistent with the Proposed Rule, the Final Rule eliminates the definition of “covered entity”, and clarifies that HHS enforcement authority only extends to (1)  a health program or activity, any part of which is receiving federal financial assistance, (2) any program or activity administered by HHS under Title I of the ACA (such as health insurance Marketplaces), but not those that are administered by another federal agency, and (3) any program or activity administered by an entity established under Title I of the ACA.  “Health program or activity” encompasses all operations of entities principally engaged in the business of providing healthcare that receive federal financial assistance.

Moreover, an entity principally or otherwise engaged in the business of providing health insurance is not, by virtue of such provision, principally engaged in the provision of healthcare.  Thus, the preamble to the Final Rule explains that to the extent an employer-sponsored group health plan does not receive federal financial assistance, such as credits, subsidies, or contracts of insurance, from HHS and is not principally engaged in the business of providing healthcare, the health plan and the employer are not covered entities.  This applies even if the plans are not covered by ERISA (e.g., church plans or non-federal governmental plans). 

Sex Discrimination

Section 1557 prohibits entities that receive federal financial assistance, any programs or activities administered by an Executive Agency under Title I of the ACA, or a health insurance marketplace (established under Title I) from discriminating against individuals on the basis of race, color, national origin, sex, age, or disability.

The Final Rule eliminates the definition of “on the basis of sex,” which previously included termination of pregnancy, sex stereotyping, and gender identity. By eliminating this definition, the Final Rule excludes gender identity, stereotyping, and pregnancy termination as protected categories under Section 1557. 

The Final Rule uses enforcement mechanisms under other applicable laws and regulations incorporated under Section 1557, which include including the Title VI of the Civil Rights Act of 1964 (race, color, or national origin), Title IX of the Education Amendments of 1972 (sex), the Age Discrimination act of 1975 (age), or Section 504 of the Rehabilitation Act (disability) for purposes of any violations of Section 1557.

To address the elimination of termination of pregnancy, the Final Rule includes the following provisions:

  • Individuals, hospitals or other institutions, programs or activities receiving federal funds cannot be forced or required to pay for a pregnancy termination.
  • No person, public or private entity can be required to pay for any benefit or services, including the use of facilities, related to a pregnancy termination.

Taglines

Under Section 1557, to assist individuals with limited English proficiency, covered entities were required to send certain notices in 15 different languages in every significant communication associated with the health plan that was larger than a brochure or postcard, such as SPDs.  As set forth in the Proposed Rule, HHS viewed this requirement as being too costly without data to back up that the taglines are beneficial.

Consistent with the Proposed Rule, the Final Rule eliminates the requirement for taglines to be included in significant communications associated with the health plan.

U.S. Supreme Court Decision Regarding Sexual Orientation and Gender Identity

Title VII of the Civil Rights Act of 1964 makes it unlawful for, among other things, an employer to fail or refuse to hire, discharge, or otherwise discriminate against an employee with respect to the employee’s compensation, terms, conditions, or privileges of employment because of the employee’s sex.  Due to a split among lower courts about whether an employee’s “sex” includes an employee’s sexual orientation or gender identity, the U.S. Supreme Court agreed to hear the issue in the Bostock case last year.  On Monday, June 15, 2020, the Court issued its much anticipated decision.   

President Trump’s appointee, Justice Gorsuch, wrote the Majority Opinion and was joined by Justices Roberts, Breyer, Ginsberg, Kagan, and Sotomayor in holding that an employer violates Tile VII if the employer terminates an employee based on the employee’s sexual orientation or gender identity.  While all parties conceded that the term “sex” in 1964 referred specifically to the biological distinctions between males and females, the Court concluded that when the an employer uses an employee’s sexual orientation or gender identity as a basis for hiring or firing, the employee’s sex is (or sex-based rules are) so inextricably intertwined with the decision that a violation of Title VII occurs. Specifically, the opinion provides, “It is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”

Therefore, whether “sex” discrimination includes gender identity or sexual orientation is a settled issued under federal law, and employers should ensure they update any handbooks or other employer policies and take any other necessary actions to ensure compliance with the law.

Section 1557 in Light of the Supreme Court’s Decision

While many speculated that HHS delayed releasing the Final Rule on Section 1557 due to the outstanding U.S. Supreme Court decision, the timing could not have been any more interesting.  While the Bostock opinion speaks exclusively to Title VII and Section 1557 speaks to Title IX for purposes of sex discrimination, given the similar protections of Title IX and Title VII, which apply “because of” or “on the basis of” sex, we expect the removal of “gender identity” from the protections of Section 1557 will bring about new challenges to the Final Rule in light of the Bostock opinion.

Moreover, as Title VII prohibits employers from discriminating against employees in the terms and conditions of employment on the basis of their sex, including gender identity or sexual orientation, employers should consider this when determining coverage options for employees.  Blanket exclusions in group health plans for services related to gender dysphoria or gender identity disorder may be subject to challenge under Title VII.

 

About the Author.  This alert was prepared for Alera Group by Marathas 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 Marathas 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.

© 2020 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Legal Alert: IRS Releases Updated Form 720 Used For PCORI Fee Payments

Posted on June 16th, 2020

As we recently reported, on June 8, 2020, the IRS released the applicable PCORI fee for plan years ending between October 1, 2019 and September 30, 2020.  As we indicated in that alert, an updated Form 720 had not yet been released and, therefore, employers were advised to wait to file their PCORI fees until the IRS released the updated form.  Late last week, the IRS issued the updated Form 720, which is the April 2020 Revised form. Employers who sponsored a self-funded health plan, including an HRA, with a plan year that ended in 2019 should use this updated Form 720 to pay the PCORI fee by the July 31, 2020 deadline.

As a reminder:

  • 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.
  • Plans that ended between January 1, 2019 and September 30, 2019 use Form 720 to pay their PCORI fee of $2.45 per covered life. 
  • Plans that ended between October 1, 2019 and December 31, 2019, use Form 720 to pay their PCORI fee of $2.54 per covered life. 

 

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 Marathas 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. © 2020 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Alera Group Releases Results of COVID-19 Employer Pulse Survey: Phase 2

Posted on June 16th, 2020

One-Third of All Employers Furloughed Employees Yet Nearly 85% Plan to Bring Back Workers

Alera Group, a national employee benefits, property and casualty, retirement services and wealth management firm, today released the results of the Alera Group COVID-19 Employer Pulse Survey: Phase 2.

The survey identified several key findings:

  • Pandemic Response: More companies have implemented a formal infectious disease response plan, and 46% of employers surveyed are putting one in place now or considering adding one.
  • Increased Furloughs and Layoffs: 30% of surveyed companies have furloughed employees, but the majority are planning to bring back those employees within three months. The restaurant/entertainment and automotive industries have been the two hardest hit, furloughing roughly 80% and 70% of their workforces respectively. Size has also played a role: companies with 1,000 or more employees furloughed the most employees, at 56%. Companies in the 2549 employee range size faired the best with those companies laying off 16% of workforce.
  • Continuing Benefits: Of those that have furloughed employees, the majority of companies are continuing benefits, rather than requiring furloughed employees to go on COBRA. This response is similar to the results from the first Pulse Survey, where 87% were continuing benefits for furloughed employees.
  • Remote Work: A third of respondents say more than 75% of their workforce is doing well with remote work. Onethird also say they are likely to require employees to continue remotely to reduce physical office costs.
  • Employee Safety: Companies are taking a variety of actions to help keep their employees safe including increasing the frequency and depth of cleaning, providing protective gear, and limiting the number of employees in certain areas.

“One thing is certain; the impacts of COVID-19 have had a wide-reaching and deep impact on nearly every industry,” said Sally Prather, Employee Benefits Practice Leader for Alera Group. “Despite the challenges from the coronavirus, since the first survey, we’ve seen that many employers have been handling the situation to the best of their abilities. The good news that is worth repeating: 84% of those employers surveyed plan to bring furloughed employees back soon with the right health precautions.”

Continues Prather, “Employers should continue to stay updated with the CDC and follow their guidelines to make sure the transition from home to workplace runs smoothly and effectively.”

The Alera Group survey was conducted online from May 18 to May 29, 2020, and consisted of 804 employers across various sizes, industries and regions. The full survey report can be viewed here. The first edition of the survey was conducted online from March 27 to April 6, 2020, and consisted of 831 employers. The first edition of the survey can be found here.

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About Alera Group

With over 80 locations across the country and nearly 2,000 teammates, Alera Group works together to deliver solutions in employee benefits, property and casualty, retirement services and wealth management. Built on a unique model of collaboration, Alera Group is now the 17th largest independent insurance agency in the United States. For more information, visit aleragroup.com.

Weekly Wrap-up: Wellbeing Resources

Posted on June 15th, 2020

I was catching up on some of Dr. Rosie Ward’s recent blogs yesterday and one point she made that resonated with me is that emotional literacy is becoming critical. She notes that whether people are processing the grief and trauma of this pandemic now or later, at some point it will hit them. Are the leaders in our organizations emotionally literate? Will they be able to tend to the fears and anxiety of those they lead and support? Do our employees know where they can go for support? These are some critical questions to ask ourselves and our organizations as we move through this next phase of the ‘new normal’. Many of our clients are working through these tough questions right now. 

Career Wellbeing

  Social & Family Wellbeing

  Social

  • How to Cultivate Deeper Connections with our Colleagues, Family, and Friends – New York Times bestselling author, Kelly Corrigan, speaks with LinkedIn’s Head of Social Impact, Meg Garlinghouse, to discuss her latest book ‘Tell Me More’, a deeply personal, honest and often funny examination of some of the key phrases that help foster connection in our lives. Tuesday, June 17th at 2 PM ET.

Family

  • Understanding Your Child’s Mind: Better Parenting Through Neuroscience – Psychologist Chris Parrot will teach you how to model and teach emotion regulation, first by managing your own emotions, then by helping your children manage theirs. She will talk about how connection can help ease anxiety and discuss things we can do to remove perceptions of unfairness. Wednesday, June 17th at 11 AM ET. RSVP HERE*’Pay What You Want Wellness’, donation optional

  Financial Wellbeing

  • Sneaky Ways to Save Money – Ashley Feinstein Gerstley of the Fiscal Femme will make it easy for you to save by sharing powerful mindset reframes, sneaky strategies to trick yourself into saving money and systems that make these habits stick. 

  Physical Wellbeing

  • Tackling Insomnia, Anxiety, Weight, and Hormones Naturally with Esther Blum  – In this interview, Integrative Dietician, Esther Blum, discusses the best time of day to eat carbs to improve sleep (and not gain weight), keys to tackling insomnia without medication, the simple weight loss formula that works for all her clients and more.
  • Smoothie Makeover – If you’re looking to add some variety to your morning breakfast routine, here are some fresh and healthy smoothies that are worth a taste! 

  Emotional Wellbeing

  • Morning Vinyasa Yoga -Join Namaste Wellness for this FREE class which will help you breathe, stretch, and connect to your body to release stress. Thursday, June 19th at 7:30 AM ET. RSVP HERE
  • How to Feel Grounded: 7 Spiritual & Practical Tips – Gabby Bernstein says that to truly show up for ourselves and for each other right now, we need to feel grounded. Read her top tips

  Community Wellbeing

  • Help the Red Cross as they face “staggering” blood shortages – Shortages were building up as people stayed home with social distancing. But now, as states re-open and elective surgeries resume, the Red Cross is facing critical shortages. Find out where you can donate blood. 

EMPLOYER FOCUSED RESOURCES

  

For more resources and updates, check out our Coronavirus Resource Center at aleragroup.com/coronavirus/.

 

About the Author

Andrea Davis, Director of Wellbeing
Andrea joined Alera Group Northeast (formerly CBP) in July 2013, bringing over 15 years of experience in management consulting and strategic solutions. As the Director of Wellbeing, she is responsible for assisting with the development, implementation and evaluation of comprehensive wellness strategies for existing and prospective Alera Group clients. She provides assistance and support to Alera Group clients by developing personalized programs that fit clients’ unique health management needs, wellness program implementation, committee development, promotion and marketing of their programs to encourage participation. In addition, Andrea conducts program analysis and generates reports related to program participation, health assessment and client utilization. 

 

REMINDER: PCORI Fees Due By July 31, 2020

Posted on June 8th, 2020

Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2020 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 were required to pay PCORI fees until 2019, 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.  This year, employers will pay the fee for plan years ending in 2019.

For plan years that ended between January 1, 2019 and September 30, 2019, the fee is $2.45 per covered life and is due by July 31, 2020.  

Since the extension of the PCORI fee deadline in December, issuers and sponsors of self-funded plans have been anxiously awaiting information from the IRS concerning the applicable PCORI fee for plans with plan years ending between October 1, 2019 and before October 1, 2020.  On June 8, 2020, the IRS Issued Notice 2020-44, which sets the applicable PCORI fee for these plans at $2.54 per covered life.  As of June 8, the IRS has not released the second quarter Form 720.  The second quarter Form 720 must be used to pay the PCORI fee. 

In addition, Notice 2020-44 provides transition relief to issuers and self-funded plan sponsors for purposes of calculating the PCORI fee for plan years ending on or after October 1, 2019 and before October 1, 2020.  The rationale provided by the IRS is because issuers or plan sponsors may not have anticipated the need to identify the number of covered lives during this time period because they believed the PCORI fee expired on September 30, 2019. 

Accordingly, the IRS provides that plan sponsors of impacted plans may continue to use the actual count, snapshot, or Form 5500 method to calculate the average number of lives and determine the applicable PCORI fee.  These methods are discussed more fully later in this alert.  Additionally, the IRS also provided that plan sponsors of impacted plans may opt to use a “reasonable method” to calculate the average number of covered lives for the plan year ending on or after October 1, 2019 (but before October 1, 2020) as long as the method is applied consistently for the duration of the plan year. 

Therefore, for example, a plan year that ran from July 1, 2018 through June 30, 2019 will pay a fee of $2.45 per covered life and use the snapshot, Form 5500, or actual count method to determine the average number of covered lives.  On the other hand, calendar year 2019 plans will pay a fee of $2.54 per covered life and use the snapshot, actual count, Form 5500, or another reasonable method to calculate the average number of covered lives for the plan year. 

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.  

NOTE: Employers must wait until the second quarter Form 720 is released by the IRS to pay the fee.  If this is an employer’s last PCORI payment and they do not expect to owe excise taxes that are reportable on Form 720 in future quarters (e.g., because the plan is terminating), they may check the “final return” box above Part I of Form 720.

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. 

Historical Information for Prior Years

  • For plan years that ended between October 1, 2018 and December 31, 2018, the fee is $2.45 per covered life and was due by July 31, 2019.
  • For plan years that ended between January 1, 2018 and September 30, 2018, the fee is $2.39 per covered life and was due by July 31, 2019.
  • For plan years that ended between October 1, 2017 and December 31, 2017, the fee is $2.39 per covered life and was 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 was 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.

Explanation of Counting Methods for Self-Insured Plans

As discussed above, plan sponsors of plans years ending before October 1, 2019 may choose from the below three methods below when determining the average number of lives covered by their plans. Plan sponsors with plan years ending on or after October 1, 2019 and before October 1, 2020 can use any of the three methods below or another reasonable method. The IRS did not specify a reasonable method that could be used, though employers should use good faith when determining the count.

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 beneficiary 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 Alera Group by Marathas 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 Marathas 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.

© 2020 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Weekly Wrap-up: Wellbeing Resources

Posted on June 8th, 2020

In a webinar I recently listened to, the presenter talked about how one of the most important things an employer can do right now is to build trust. Trust is imperative, they stated, because as employees return to the workplace, they will need to trust that their employer has done all that they can to keep them safe.

I was reminded of that takeaway today when reading this quote from Brene Brown:  “Trust is earned in the smallest of moments. It is earned not through heroic deeds, or even highly visible actions, but through paying attention, listening, and gestures of genuine care and connection.”

I think this speaks to the importance of the amazing work so many of you have been doing these past two months to care for your teams and to support their Wellbeing. That work is more important than ever right now.   

Have a safe and healthy week.

 

  Career Wellbeing

  • Learn More About You and Your Workstyle in 6 Minutes – The Predictive Index Behavioral Assessment is a free 6-minute assessment that helps you learn more about how you think and how you work. 

 

  Social & Family Wellbeing

  Social

  • Concert with Washington’s Best-Known Performers – Amazon presents All in WA: A Concert for COVID Relief benefiting workers and families impacted by COVID-19 across Washington state. Featuring performances from WA state’s best-known performers including Pearl Jam, Macklemore, Brandi Carlile, Ciara, Dave Matthews, and Allen Stone. You can get more info on the live stream here.

Family

  • 14 Summer Camp Alternatives During COVID-19 – Wondering how you are going to keep your kids busy this summer if they aren’t in summer camp? Here are a few ideas to get you started.  

 

  Financial Wellbeing

  • How to Save Money on Groceries – The cost of certain food items skyrocketed during the pandemic. As people try to start settling back into more ‘normal’, healthy routines, how can they eat well without breaking the bank?

 

  Physical Wellbeing

  • Pilates Mat Class – Join Namaste NY for this quick, 30-minute workout. Pilates is a dynamic, total body workout that encourages mind-body connection and helps combat the effects of sedentary work life. Wednesday, June 10th 7:30-8 AM. RSVP HEREFREE
  • How Can I Prevent Myself From Getting Sick? – Join Triple -Board Certified Health Expert, JJ Virgin, for a quick (8 min) conversation on how to optimize your immune system. 

 

  Emotional Wellbeing

  • Racial Trauma Support – Join Modern Health for community sessions led by Black mental health providers to help people of color navigate the traumas of structural racism. Thursday, 6/11 at 8 PM ET. RSVP HERE
  • Gratitude as a Practice for Moving From Me to We – Join Scott Shute, Head of Mindfulness and Compassion at LinkedIn, to learn how gratitude helps reset the brain and stay balanced during uncertainty. Scot will also discuss how to integrate these concepts into our daily lives. WEBINAR. Wednesday, June 10th at 12:30 PM ET. RSVP HERE
  • Guided Meditation – Join Namaste NY for this 30-minute Guided Meditation. This experience is designed to maximize the mind and the body’s own ability to manage stress. RSVP HEREFREE 

 

  Community Wellbeing

  • Supporting Racial Justice – This is a time of sadness, pain and anger for many. If you want to take action and are looking for a place to start, here are a few ideas

 

  EMPLOYER FOCUSED RESOURCES

  • Humanizing the Workplace – Join WELCOA and Aaron Hurst, Co-founder & CEO of Imperative, to discuss strategies to humanize your workplace. WEBINAR – Tuesday, June 9th at 3 PM ET. RSVP HERE.

 

For more resources and updates, check out our Coronavirus Resource Center at aleragroup.com/coronavirus/.

 

About the Author

Andrea Davis, Director of Wellbeing
Andrea joined Alera Group Northeast (formerly CBP) in July 2013, bringing over 15 years of experience in management consulting and strategic solutions. As the Director of Wellbeing, she is responsible for assisting with the development, implementation and evaluation of comprehensive wellness strategies for existing and prospective Alera Group clients. She provides assistance and support to Alera Group clients by developing personalized programs that fit clients’ unique health management needs, wellness program implementation, committee development, promotion and marketing of their programs to encourage participation. In addition, Andrea conducts program analysis and generates reports related to program participation, health assessment and client utilization. 

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such.  Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice.  This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

 

Despite Its Low Cost, Most Consumers Don’t Buy Cyber Risk Insurance

Posted on June 5th, 2020

A new report by the Insurance Information Institute (Triple-I) says most Americans underestimate the threat of cybercrime and are not buying insurance against it, despite its low cost.

Americans have embraced the Internet of Things, with three out of five surveyed reporting connected technology in their homes and one-quarter in their vehicles in 2018. Four out of five adult Americans have smartphones, nearly three-quarters own a desktop or laptop computer, and about 50 percent own tablet computers and another 50 percent own e-readers.

Despite the risk of cybercrime, the report continues, Americans severely lack an understanding of how to use insurance to help them recover from attacks that can result from using connected devices. Only about one in 10 American consumers who own connected devices say they have insurance to help them recover from a cyberattack. And close to half do not know whether they have this protection, according to Triple-I and J.D. Power’s 2020 Consumer Cyber Insurance and Security Spotlight Surveysm,.

Furthermore, fewer connected device owners say they have cyberrisk insurance than when the Triple-I and J.D. Power polled them in the 2018.

Besides the lack of awareness about cyberrisk coverage in their insurance policies, connected consumers indicate that they would not be willing to pay more for coverage, even though cyber insurance is relatively inexpensive. Most homeowners and renter policies can also provide coverage for identity restoration as an endorsement, or add-on, to a policy. At the end of 2018 identity theft coverage from a package policy cost about $10 and about $40 for a separate policy.

As Americans own more internet-connected devices and make more online purchases, and businesses use more electronic data and online storage, cyberattacks continue to occur at high levels. According to the Identity Theft Resource Center, in 2019 there were about 1,470 data breaches, endangering about 165 million records containing personally identifiable information. About nine out of 10 American consumers who own connected devices either lack insurance to help them recover from cyberthreats or don’t know if they are covered.

•    Despite reports of ever-larger data breaches, awareness of the protection available to consumers through insurance has shrunk over the past year. In 2019, 11 percent of connected consumers said their property insurance policy included cyberrisk coverage, while 15 percent said they had the coverage in the 2018 cyber survey report.

•    More than half of connected device owners thought that their homeowners or automobile policies should offer cybersecurity coverage but about three-quarters appear reluctant to pay more for the coverage. There was no change in this attitude in 2019 from the 2018 report.

•    There appears to be contradictions in attitudes toward privacy. Six out of 10 connected consumers said they had no privacy or security concern related to their connected device. But close to half of connected consumers have taken some step to protect their privacy.

•    Security and safety were the most cited reasons for choosing a connected home or car device in the 2019 survey.

•    About three-quarters of connected consumers do not feel comfortable sharing personal information on social media.

The 2020 Consumer Cyber Insurance and Security Spotlight Survey was conducted in September 2019 by J.D. Power in partnership with the Triple-I. The online survey was comprised of 683 owners of homes and vehicles with connected technology. The report is available to download here.

Please contact your local advisor or email us at info@aleragroup.com to discuss adding this valuable coverage to policies. 

Telemedicine– How It Is Changing Healthcare

Posted on June 1st, 2020

The COVID-19 pandemic has put a spotlight on telemedicine (telehealth) and its value as part of an individual’s and an employer’s healthcare plan. Originally developed largely as a convenience for individuals, telemedicine is now nearly a necessity for both individuals and medical providers. 

HSAs and Telehealth Expansion (CARES Act)

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows high deductible health plans (HDHPs) to cover telehealth before participants meet their deductibles (i.e., without cost-sharing). This temporary safe harbor applies for plan years beginning on or before December 31, 2021, unless extended. As a result of this safe harbor, no-cost telehealth may be provided for any reason–not just COVID-19 related issues–without disrupting HSA eligibility.

  • If your plan is fully insured, you need to check with your carrier.  Most carriers have issued information on how telemedicine services are being covered.
  • If your plan is self-funded, including level funded, you should discuss with your plan administrator (which may be an insurance carrier).

Caution on Offering Telehealth to Employees Not Eligible for Group Health Plan

If you are considering offering a stand-alone telemedicine program to employees not eligible for your health plan, we encourage you to read this Legal Alert for compliance concerns. 

Telemedicine Use Beyond This Pandemic

Telemedicine provides greater safety during this pandemic, but even after the pandemic, it can continue to provide:

  • More immediate access to medical consultation for non-emergencies, available 24/7
  • Diagnosis and treatment, recommendations or reassurance – without leaving your home or workplace
  • Elimination of in-office waiting rooms, which take additional time and have potential exposure risk to communicable diseases

While it will never replace an in-person medical consultation and physical exam, telemedicine will be an increasingly important part of healthcare as we move out of this pandemic.  We encourage you to review your health plan for how telemedicine may be used or integrated into your program.

If you have any questions, please contact your Alera Group advisor or email us at info@aleragroup.com to be connected with a local firm in your area.

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such.  Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice.  This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

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