The Patient-Centered Outcomes Research Institute (“PCORI”) fee was established as part of the Affordable Care Act (“ACA”) to fund medical research through the PCORI Institute. Employers and plan sponsors who sponsored a self-insured medical plan that ended anytime during calendar year 2024 are required to report and pay the PCORI fee no later than July 31, 2025. Detailed guidance regarding how to calculate, report, and pay the fee is provided on the IRS PCORI fee webpage. A summary of key facts is below.
Plan sponsors of fully insured medical plans are not responsible for paying the PCORI fee (the obligation rests with the insurer). Plan sponsors of most self-insured medical plans (including health reimbursement arrangements or HRAs) are required to pay the PCORI fee. Special rules apply, such as multiple self-insured arrangements established and maintained by the same plan sponsor and with the same plan year are subject to a single fee. See this IRS chart for details on the different types of plans subject to the fee.
The PCORI fee payment deadline is July 31, 2025, for plan years that end in calendar year 2024.
PCORI fees are based on the average number of covered lives under the plan or policy. “Covered lives” generally include employees (and retirees) and their enrolled spouses and dependents, as well as individuals who are receiving COBRA or other continuation coverage. The PCORI fee due differs based on the employer’s plan year(s):
The PCORI fee is paid using the June version of IRS Form 720, Quarterly Federal Excise Tax Return, and completing Part II, Number 133(c) and (d) of Form 720. Specific instructions regarding PCORI can be found on page 9 of the Form 720 Instructions. Plan sponsors who are not required to report any other liabilities on a Form 720 will be required to file the Form only once per year. Note that in the header of the Form, the quarter ending date should be completed as “June 30” or “June 30, 2025”, to indicate the Form is being filed for the 2025 second quarter. Plan sponsors are not required to pay the fee electronically, but if paid through the Electronic Federal Tax Payment System, the payment should be indicated as applied to the second quarter. If paid by mail, it is very important that the Payment Voucher (720-V) indicate the tax period for the fee is for the “2nd Quarter” (otherwise IRS may send a late notice).
Should you have questions about this or any other aspect of healthcare reform, please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) generally requires parity between a group health plan’s medical/surgical (M/S) benefits and mental health/substance use disorder (MH/SUD) benefits. Plan sponsors should continue to ensure that they comply with MHPAEA and monitor any participant complaints and litigation regarding access to MH/SUD coverage under their group health plans. This update addresses a recently announced non-enforcement policy from the U.S. Departments of the Treasury, Labor, and Health and Human Services related to final MHPAEA regulations released in 2024.
As outlined below, the Departments made clear that MHPAEA’s requirement to have a written NQTL comparative analysis remains a requirement under the MHPAEA, and the non-enforcement policy on the 2024 regulations does not change that compliance obligation. Here are key headlines, including the welcome temporary non-enforcement policy from regulators.
Most of the 2024 Rules were effective for plan years beginning on January 1, 2025, while other parts, such as the new meaningful benefits standard and the data evaluation requirements, have a delayed effective date of the first plan year beginning on or after January 1, 2026.
In response to a legal challenge to the 2024 Rules and a federal court’s decision to grant a pause, the Departments announced that they will not enforce the 2024 Rules or otherwise pursue enforcement actions, based on a failure to comply that occurs prior to a final decision in the litigation, plus an additional 18 months. The Departments’ motion is generally in line with the Trump administration’s April 9 presidential memoranda directing the heads of all executive departments and agencies to identify certain categories of unlawful and potentially unlawful regulations. The Departments nonenforcement policy relates to the 2024 Rules for the new requirements that apply for plan years beginning on or after January 1, 2025 and January 1, 2026.
Note that employers are still required to comply with MHPAEA. The Departments made clear that MHPAEA’s requirement to have a written NQTL comparative analysis remains a requirement under the MHPAEA, and the non-enforcement policy on the 2024 Rule should not change that compliance obligation.
Group health plans and insurers have struggled to comply with the 2024 Rules and are welcoming the temporary relief provided by the non-enforcement policy. For now, plans may continue to refer to the 2013 final rule, FAQs about MH/SUD parity implementation, and other MHPAEA sub-regulatory guidance. The Departments intend to reexamine their enforcement approach under MHPAEA and may update the guidance as part of that process.
Conner Strong & Buckelew will continue to work with our clients to analyze and understand the complex requirements of the MHPAEA and to assist with the documentation of the NQTL comparative analysis as needed. We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
At the end of 2024, Conner Strong & Buckelew provided an Update on new Affordable Care Act (ACA) employer reporting changes signed into law. While the new rules did not significantly change existing employer reporting requirements, they did allow employers to meet Form 1095 distribution requirements for the 2024 reporting year by posting a notice of availability and then only distributing the Form upon request. We promised to provide an update on any subsequent IRS guidance on the notice requirements for the new distribution methods. The IRS has now released guidance providing further detail on how to satisfy the notice requirement and confirming that such notice must be posted by March 3, 2025, for the 2024 reporting year.
We have seen some employers not yet taking advantage of the alternative as they have already had their vendor mail the Forms for the 2024 year. However, we will likely see many more take advantage of this alternative next year. For any employer looking to provide the 1095-C by request, we can confirm IRS guidance Notice 2025-15 provides this is a viable option as long as the employer does the following:
Note that employers must still prepare and file Forms 1095-C with IRS each year (generally due to be filed with Form 1094-C transmittal form by March 31). And for employers subject to state-level reporting requirements in CA, MA, NJ, RI, or DC, note too that this relief for distribution of Form 1095s may not be available.
The IRS did not provide a model notice in this most recent guidance, but here is a sample to consider for posting:
MODEL / SAMPLE NOTICE
IMPORTANT HEALTH COVERAGE – TAX DOCUMENTS
Form 1095-C, titled Employer-Provided Health Insurance Offer and Coverage, is a statement of health coverage offered to eligible employees. These Forms have previously been automatically electronically distributed/mailed in prior years. According to the Internal Revenue Service (IRS), an individual does not need the information on Form 1095-C to file income taxes with the IRS. Therefore, the IRS is now allowing reporting entities to furnish 1095-C forms only upon request. Please review below for instructions on how to elect to receive the Form 1095-C.
Electing to Receive 1095-C Form Electronically
Employees should follow the below steps to consent to the electronic delivery of their 1095-C forms for the current tax year and thereafter:
Electing to Receive 1095-C Form by Mail
If you would like to receive your Form 1095-C for the 2024 tax year by mail, please submit your request using one of these options:
Calling this number: ______________________
Sending an email request to: ______________
Sending a regular mail request to: ___________
Include your name, a phone number and email address where you can be reached, and confirm your mailing address to request your 1095-C.
To learn more about this Form 1095-C and other Affordable Care Act (ACA) requirements, please visit IRS.gov/aca or call the IRS at (800) 829-1040.
Employers can choose to implement these changes in order to streamline some of their ACA reporting processes and reduce certain administrative burdens. Contact ACA reporting vendors regarding these reporting-related changes to determine how they will provide support with these optional reporting opportunities for the 2024 ACA reporting season. Should you have questions, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
Group health plan (GHP) sponsors that offer prescription drug (Rx) coverage must, at least annually, notify Medicare Part D eligible individuals and the Centers for Medicare & Medicaid Services (CMS) of their plan’s creditable coverage status. Both disclosures (to Medicare Part D eligible individuals and to CMS) must meet specific form, content and timing requirements as prescribed by CMS. This update addresses the required disclosure to CMS and reminds plan sponsors that online disclosure should be completed annually no later than 60 days from the beginning of the plan year. This means that an employer with a calendar year plan that began January 1, 2025, must complete the CMS online reporting no later than March 1, 2025, and an employer with a plan year that begins July 1, 2025, must complete the reporting no later than August 29, 2025. (For more information on the Medicare Part D disclosure requirement for individuals, please see our update Medicare Part D Notices Due Before October 15th).
Medicare Part D rules generally require that GHPs with an Rx benefit must disclose to CMS whether the Rx coverage offered is “creditable” or “non-creditable”. Individuals who fail to enroll in Medicare Part D Rx coverage when first eligible may be subject to late enrollment penalties if they go 63 consecutive days or longer without creditable Rx coverage. Because of this potential penalty, both Medicare Part D eligible individuals and CMS need to know whether the GHP’s Rx coverage is creditable or non-creditable. Rx coverage is “creditable” when it is at least actuarially equivalent to Medicare Part D Rx coverage. “Non-creditable” Rx coverage is actuarially less in value (expected to pay out less) than the coverage offered under Medicare Part D. An Rx plan must use electronic transmission of the required annual CMS notice as the sole method for compliance with this requirement, accessing the online CMS Disclosure Form to report its “creditable” or “non-creditable” Rx status at the times noted below. Guidance and instructions are provided to assist Rx plan sponsors with completing the form.
The CMS disclosure must be made annually and whenever any change occurs that affects whether the Rx plan’s coverage is creditable. CMS should receive a creditable coverage disclosure:
1. Within 60 days of the beginning of the plan year for which the disclosure is being reported.
2. Within 30 days of a change in creditable coverage status.
3. Within 30 days of the Rx plan’s termination.
A GHP is not required to submit the online disclosure form to CMS for any plan year where the plan does not offer Rx benefits to any Medicare Part D eligible individuals as of the beginning of the plan year. Also, plan sponsors approved for the retiree drug subsidy are exempt from filing the CMS disclosure notice with respect to those qualified covered retirees for whom the sponsor is claiming the subsidy. Note that this creditable coverage reporting is in addition to the mandatory CMS Medicare Secondary Payer (MSP) reporting typically handled by an insurer or third-party administrator for a GHP (see the CMS site on Mandatory MSP Reporting for more information).
Should you have questions about this or any aspect of GHP requirements, please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
Two new Affordable Care Act (ACA) employer reporting changes have been signed into law by the President. While the new rules do not significantly change existing employer reporting requirements, they do provide opportunities for employers to streamline some ACA reporting processes and reduce administrative burdens. The two new laws summarized below are effective for the current returns due in early 2025 for the 2024 reporting year.
Employer Reporting Improvement Act
This Act modifies ACA provisions that require employers and health insurance providers to prepare tax forms showing proof of minimum essential coverage or “MEC” (1095-B and 1095-C tax forms). Currently, employers and health insurance providers that provide MEC must report this information for each covered individual to the IRS, including the covered individual’s Tax Identification Number (TIN/social security number). Employers and providers must also send a copy of this information to the covered individual (through 1095-B and 1095-C tax forms) by January 31 of each year (extended to March 3, 2025 for the 2024 reporting year). Additionally, under current law, large employers (generally those with 50 or more full-time employees) are subject to an assessment by the IRS if they do not offer affordable MEC. Changes made to streamline these processes are as follows:
Paperwork Burden Reduction Act
This Act modifies ACA provisions so that employers and health insurance providers are no longer required to send tax forms to covered individuals showing proof of MEC (1095-B and 1095-C tax forms) unless a form is requested. Currently, employers and health insurance providers that provide MEC must report this information for each covered individual to the IRS and provide a copy of this information to the covered individual (through 1095-B and 1095-C tax forms) by January 31 of each year (extended to March 3, 2025 for the 2024 reporting year). Changes made to streamline these processes are as follows:
State Reporting Requirements Continue
The changes addressed in this Update affect federal ACA employer reporting requirements. Employers with employees in states that have their own reporting requirements (CA, MA, NJ, RI, DC) should make note that they may not benefit from this relief for the 2024 reporting year and should stay informed on how these federal ACA reporting changes may impact applicable state/local reporting requirements.
Next Steps for Employers
Employers can choose to implement these changes in order to streamline some of their ACA reporting processes and reduce certain administrative burdens. Your Conner Strong & Buckelew account team will work with you to stay informed and understand these new optional reporting opportunities. We will also keep our clients updated on subsequent IRS guidance on the notice requirements for the new distribution methods. Should you have questions, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
The extension for first dollar coverage of telehealth care for plan sponsors that offer a high deductible health plan (HDHP) paired with a health savings account (HSA) did not make the final spending bill signed by President Biden on December 21, 2024. There’s hope that this measure will be brought back in 2025 by the new (119th) Congress and made retroactive. But for now, the safe harbor is no longer available and, therefore, individuals who are covered by an HDHP with no cost sharing for telehealth services will not be eligible to contribute to an HSA for plan years beginning in 2025.
The Extensions
The first HSA-qualified HDHP telehealth safe harbor was provided under the “CARES Act” effective on March 27, 2020, for plan years beginning on or before December 31, 2021, permitting HDHPs to cover telehealth or other remote-care services before the plan’s deductible was met. Subsequent legislation further extended the telehealth flexibility from April 1, 2022, through December 31, 2022, and then it was again further extended for plan years beginning after December 31, 2022, and before January 1, 2025. The extension has now ended for calendar year plans starting January 1, 2025, or later. Non-calendar year plans may continue to provide pre-deductible telehealth into 2025, but only through the run-out of the current plan year that started in 2024.
Next Steps
With the end of the extension, HDHPs should now be amended so that any telehealth items or services (other than preventive) provided before the deductible is met are subject to cost-sharing. If the HDHP were to permit reimbursement for telehealth services before the deductible is met, the HDHP would not be HSA-qualified, and participants could not contribute to an HSA for that plan year. To address this, participants could be required to pay the fair market value (FMV) of the services (or managed care rates for discounted health services, if applicable) until the HDHP deductible is satisfied. Then once their HDHP deductibles have been satisfied, they can have access to free or low-cost medical benefits without jeopardizing their HSA eligibility.
Employers who intend to ensure that their employees remain HSA eligible during the 2025 plan year and beyond would want to consider making changes to their telehealth benefit offerings to preserve HSA eligibility. If further relief is not provided, the simplest solution may be to remove access to telehealth for those enrolled in the employer’s qualified HDHP. Alternatively, an employer could choose to charge FMV for a telehealth visit until the minimum HDHP deductible is met. Plan sponsors should contact their HDHP administrator to determine how they will address telehealth coverage now that the safe harbor has ended, and how communication to participants will be handled.
We expect this issue will again eventually be addressed in the next Congress, but in the meantime, the current extension expires for plan years beginning on or after January 1, 2025. We will keep our clients updated on efforts to restore the telehealth flexibility and any additional guidance from the administration or passed by Congress.
Should you have questions, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
The IRS has issued two new Notices expanding the list of items and services that qualify as “preventive care” under health savings account (HSA)-compatible high deductible health plans (HDHPs) and as medical care expenses under group health plans. One Notice provides that condoms are now considered “medical care” expenses and can be covered/reimbursed by group health plans, including FSAs, HRAs and HSAs. The Notices take effect retroactively and provide that HSA-eligible HDHPs can permit pre-deductible coverage of certain over-the-counter (OTC) contraceptives, glucose/insulin treatment and breast cancer screening without affecting eligibility for HSAs.
Coinciding with the release of these Notices, the agencies proposed regulations to amend current Affordable Care Act (ACA) rules that would require preventive care to include certain OTC contraception (including condoms) without cost sharing and without a prescription.
Note that Notice 2024-75 only addresses items that may be treated as preventive care for purposes of the HDHP preventive care safe harbor. It does not address what the ACA requires non-grandfathered health plans to cover in the way of specific recommended “preventive care services” on a “first-dollar basis” (that is, without any copayments, deductibles or other cost sharing). So, for example, currently the ACA’s preventive care mandate requires health plans to cover OTC preventive products without cost sharing only when they are prescribed by a health care provider. However, the agencies have recently released proposed preventive services regulations that may impact some of these issues.
These proposed rules would require, for the first time, that most group health plans cover OTC contraceptives without cost sharing and without a prescription. The proposed rules also would require these plans to cover all recommended contraceptive drugs and drug-led combination products, unless a therapeutic equivalent is already covered without cost sharing. The proposed effective date for these requirements is plan years beginning on or after January 1, 2026. Lastly, it is possible the U.S. Supreme Court may take up a closely watched case (see petition for certiorari) impacting the ACA’s preventive services mandate. If certiorari is granted, we would expect the outcome of the case to provide much needed clarification on preventive service mandate issues.
Health FSA, HRA, and HDHP administrators will want to take note of the guidance from the new Notices referenced above, which will be good news for participants and HSA account holders. Employers with HDHPs should review their plans’ design and consider whether to cover these expanded items without a deductible. Keep in mind that changes made as a result of the guidance may require plan amendments and changes to summary plan descriptions or other communications to participants.
Should you have questions, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
