The U.S. Department of Treasury this week signaled how the Internal Revenue Service (IRS) will implement rules designed to collect fees from health insurers and self-insured health plans imposed by the Affordable Care Act (ACA) in order to fund the Patient-Centered Outcome Research Trust Fund. According to the ACA, the funding requirements are as follows:
- Plan year ending in FY 2013 — $1 per covered life
- Plan year ending in FY 2014 — $2 per covered life
- Subsequent year – the amount of previous year plus the percentage increase in the projected per-capita amount of National Health Expenditures
- Fees will sunset after 2019
The guidance has come in the form of a notice of proposed ruling. Key excerpts from the notice related to self-insured plans are as follows:
Applicability to Stop-Loss Insurers
The notice confirms that stop-loss insurance will not be considered health insurance for purposes of fee assessment. SIIA had previously requested this clarification in a comment letter filed last year.
Financial Liability for Fee Payment
The notice confirms that the self-insured plan sponsor is solely responsible to pay the required fee. Third party administrators working on behalf of self-insured plans shall not be subject to any financial liability associated with fee payment.
Payment of Fees from Plan Assets
The Treasury Department and IRS have consulted the Department of Labor concerning comments on the appropriate sources to pay the fee. The DOL has advised Treasury and the IRS that it is considering permissible funding sources for these fee payments by plan sponsors that are subject to ERISA’s fiduciary provisions.
Calculating the Average Number of Covered Lives
The notice proposes that self-insured plans can use any of the following three options for calculating the average number of covered lives:
Option #1: A plan sponsor may determine the average number of lives covered under the plan for the plan year by calculating the sum of the lives covered for each day of the plan and dividing that sum by the number of days in the plan year (the actual count method).
Option #2: A plan sponsor may determine the average number of lives covered under the plan for the plan year by adding the totals of lives covered on one date in each quarter, or an equal number of dates for each quarter, and dividing the total number of dates on which a count was made (the snapshot method).
Option #3: A plan sponsor may determine the average number of lives covered under the plan for the plan year based on a formula that includes the number of participants actually reported on the Form 5500 for the applicable self-insured health plan for the plan year (the form 5500 method).
Third Party Reporting and Payments
The IRS does not intend to create reporting or payment requirements for third parties who may act on behalf of plan sponsors in complying with the fee payment requirements.
