News and Blog



Tuesday, 19 June 2018

Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 and pay the fee to the IRS directly.

Which self-insured plans must pay the fee directly to the IRS?

All self-insured medical plans, including health FSAs and HRAs, must pay the fee unless the plan is either primarily for employees working/residing outside of the U.S., or is considered an excepted-benefit.

  • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
  • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

How much is the PCORI fee?

For plan years:

  • Ending on or after Oct 1, 2016 and before Oct 1, 2017: $2.26 per covered life
  • Ending on or after Oct 1, 2017 and before Oct 1, 2018: $2.39 per covered life

Plan Years Ending in 2017


Feb 2016 – Jan 2017


Mar 2016 – Feb 2017


Apr 2016 – Mar 2017


May 2016 – Apr 2017


Jun 2016 – May 2017


July 2016 – Jun 2017


Aug 2016 – July 2017


Sept 2016 – Aug 2017


Oct 2016 – Sept 2017


Nov 2016 – Oct 2017


Dec 2016 – Nov 2017


Jan 2017 – Dec 2017


The fee is indexed for future years, and ends in 2019.

Participating employees and dependents are counted as covered lives. For HRA and health FSA plans, just count each participating employee as a covered life.

How does the employer/plan sponsor pay the fee to the IRS?

Employers complete and file the Form 720 for the second quarter. The Form 720 and fees are due on July 31 of the calendar year following the last day of the plan year. If your medical plan year ended in 2017, your Form 720 is due by July 31, 2018.

The Form 720 and instructions are available on the IRS website:


Employers/plan sponsors need to complete:

  • Company information and quarter ending “June 2018”
  • Part II, IRS No. 133
    • Column (a) – under “Applicable self-insured health plans”, enter “Avg. number of lives covered” in row (c) or (d), depending on end of plan year
    • Column (c) – enter total Fee (lives x $)
    • Tax column – enter the amount of the fee (from Column (c))
  • Part II, Line 2 – enter Total Tax (from Tax column on No. 133)
  • Part III, Line 3 – enter Total Tax (from Part II, Line 2)
  • Part III, Line 10 – enter Balance Due (from Part III, Line 3)
  • Signature section
  • Pay electronically or complete the payment voucher (last page) with “2nd Quarter” checked to pay by check
  • Send the form, along with check and payment voucher, to:
    Department of the Treasury
    Internal Revenue Service
    Cincinnati, OH 45999-0009

To calculate the “Avg. number of lives covered”, use one of the three methods listed on pages 8 and 9 of the instructions:

Actual count method – The total number of lives covered (employees and their covered family members or only employees if HRA or FSA) on each day of the plan year, divided by the total number of days in the plan year.

Snapshot method – At least one date during each month of each quarter. Dates in each quarter must be within 3 days of the dates for corresponding quarters.

Snapshot actual method – Total number of lives covered (employees and their covered family members or only employees if HRA or FSA) on each selected date, divided by the number of dates used.

Snapshot factor method – Number of participants with self-only coverage plus 2.35 times the number of participants with other than self-only coverage. (Do not use this method for HRA or FSA plans.)

Form 5500 method – Use participant counts from the 5500 for that plan for that year.

Plan with only self-only coverage – Add the total number of participants at the beginning and end of the plan year, and divide by 2 to get the average for the year.

Plan with self-only and dependent coverage – Add the total number of participants at the beginning and end of the plan year. (Do not use this method for HRA or FSA plans.)

If you have a BlueCross BlueShield of Tennessee Health Reimbursement Arrangement

How are participants counted when covered under more than one medical plan by the same employer?

HRA and insured plan: Not treated as a single plan, so the employer/plan sponsor pays the fees for the HRA and the carrier pays the fees for the insured plan. However, the employer/plan sponsor may count just employees as covered lives in the HRA, and disregard covered dependents.

HRA and other self-insured plan: Treated as a single plan for purposes of calculating the fee, so each participant (including dependents) is only counted once.

Multiple HRAs and an insured plan: The carrier still pays the fees for the insured plan. The HRAs may be treated as a single plan for purposes of calculating the fee, so each participant (disregarding covered dependents) is only counted once.

Posted on 06/19/2018 11:15 AM by David Moore
Friday, 08 June 2018

On Thursday June 7th, the Justice Department agreed with the state of Texas's lawsuit claiming the individual mandate is unconstitutional. This deals a huge blow to the Affordable Care Act and could vastly change how individual and small group health insurance policies work in the future. 

The individual mandate requires every American to have health insurance or pay a penalty. This was a provision the insurance companies required in order to offer policies with guarantee issue and no pre-existing conditions for everyone. Additionally, carriers would use community rating structures so everyone paid the same premium regardless of their health and smoker status and if they were a man or woman. This of course raised the cost of coverage for millions of healthy Americans who helped to reduce the cost for those who could not previously get coverage due to their health. 

This ruling could be the change the republican administration is looking for to dismantle the ACA and start the process of building a better plan to provide health insurance to those who cannot qualify or afford coverage on their own. 

We don't see major changes coming for 2019 but going forward the landscape may look much different. The concern we have for our clients with the loss of the individual mandate is young and healthy employees can now drop their insurance with no penalty which reduces the overall premium to protect loss ratios and increases the average age of employees. Both of these are major reasons for health insurance rate increases. 

Read more here. 


Posted on 06/08/2018 10:10 AM by David Moore
Wednesday, 30 May 2018

Senator Bill Cassidy, R-La shared a number of proposals to lower healthcare costs by requiring providers to provide pricing transparency for many common medical procedures. In what seems common sense, the Government and healthcare industry have continually made it difficult or impossible to pass legislation that requires price transparency for common medical procedures and testing. 

Additionally, Senator Cassidy is pushing for legislation to banning "gag clauses" that prevent pharmacists from informing patients when they could save money on a drug by paying cash instead of using their insurance. This is legislation President Trump is also supporting so hopefully it will gain traction and help reduce the cost of prescriptions. 

Will these important, cost saving changes happen? There is a very large healthcare lobby in Washington that is spending a lot of money to stop it. If history prevails, we will be talking about this for years to come. 

Read more here

Posted on 05/30/2018 9:13 AM by David Moore
Friday, 27 April 2018

After a confusing series of IRS actions, they have decided to increase the family HSA contribution limit to the original $6,900 for 2018. In March 2018, the IRS announced that a change in the inflation adjustment calculators for 2018 lowered the maximum deductible HSA contributions by $50 to $6,850. This is after they had announced in 2017 the limits would be $6,900. 

Now, the IRS has granted relief or affected taxpayers by allowing the originally announced $6,900 family HSA limit to remain in effect. The IRS cited "numerous unanticipated administrative and financial burdens" in response to the $50 reduction. 

Read more here

Posted on 04/27/2018 9:07 AM by David Moore
Thursday, 26 April 2018

A recent article in Newsweek "Medication keeps getting more expensive - and big pharma won't explain why" shows the continuing problem of prescription pricing. Between 2012 and 2017, prices for the top 20 drugs prescribed to older Americans increased by an average of 12% per year. Seven of the top drugs more than doubled in price, and it's legal. 

New prescriptions entering the market are generally priced higher then their competitors. What's strange is when a new drug hits the market, companies with similar medications reprice their similar approved drugs to match the higher price, even if the drug has been on the market for years. 

The maker of Restasis which cost $167 in 2012 and $321 in 2017 vowed to avoid predatory pricing practices. "We will take price increases no more than one per year," Brent Saunders the CEO of Allergan said. 

Because Medicare is unable to negotiate with drug manufactures over their pricing practices there is little we can do to stop this. Political pressure to change this has been weak (Rx has the largest lobbying in Washington). All politicians rally around lower drug costs but the reality is nothing is happening. 

With all the new high tech, high cost medications about to hit the market it's time our leaders in Washington find a way to bring costs under control before we are all priced out of owning health insurance. 


Posted on 04/26/2018 7:46 AM by David Moore
Tuesday, 06 March 2018

In early December, we were notified that the special agreement regarding out of network emergency visits between BCBST and Tri-Star Health System would expire on December 31, 2017.  Previously, this agreement ensured BCBST members, with the S Network, would not be balance billed when using Tri-Star facilities in true emergency situations.  The expiration of this agreement brings some uncertainty.   

This is a legal battle, which puts patients squarely in the crosshairs of a fight between two large corporations. With an out of network claim, the medical provider charges whatever price they want for the services and then expects the insurance company to pay the inflated cost. This does not go over very well on the payer side and so we end up with financial battles like this. 

We have dealt with this for years and can generally help our clients resolve their balance billing issues but it's never easy or guaranteed. This morning we came in to our first BCBST vs. Tri-Star balance billing issue of 2018. One of our longtime clients has an employee who was having a heart attack and was transported to the nearest hospital, Summit Hospital which is the Tri-Star facility in Hermitage. Rather than stabilize the patient and move him to an in network facility like Vanderbilt or St. Thomas, they did the heart surgery knowing it would be treated out of network. When the first bills started coming in, the hospital charges were approximately $109,000 for the surgery. 

Generally, a claim like this has all the charges worked out ahead of time through the PPO network contract. When a claim is out of network, there are no set prices so the insurance company generally pays what they consider "reasonable and customary charges". In this case, BCBST paid Summit Hospital a little over $40,000 for the procedure. This amount seems reasonable to me but apparently not to Summit or Tri-Star. 

This weekend the patient received a letter from Summit Medical Center requesting that he make arrangements for nearly $70,000. Needless to say, he did not have a good weekend. 

What happens next? This is where two large corporations use normal working people as pawns in their multi-million dollar game of chess. They want the patient to ask BCBST to fix the problem by paying the remaining balance. Amazing for sure. 

What should you do as a BCBST member when facing a similar situation? If you are having a life or limb threatening emergency, you should always go to the nearest Emergency Room to seek treatment. If you have the flu, or some other non-life threatening situation we recommend driving a little further to an in network provider to avoid this type of situation. 

We expect BCBST and Tri-Star will work all this out over time. By that, we mean a number of years in which this could drag out. In the end, we really don't expect our clients to have to pay these exorbitant claims, but it will be hanging over their heads until the two companies come to a resolution. No he won't have to pay during their negotiations but it's still stressful and after dealing with a heart attack that is the last thing he needs. 

It's all part of trying to keep healthcare costs as low as possible but that is never easy.

Posted on 03/06/2018 2:48 PM by David Moore
Monday, 05 February 2018

Health sharing ministries are not actual health insurance. But for many individuals and families in Tennessee, the plans are more affordable than an ACA compliant plan and they are growing fast. No, this is not your typical BlueCross BlueShield health plan but for many who cannot afford that, it could be a very good option. 

As individual health insurance premiums rise along with the deductibles more people are looking for affordable options. One that is seeing more traction are the numerous religious health plans available nationwide. These plans are exempt from the Individual Mandate Penalty because Senate Democrats did not want the fight with Christian conservatives. What started as a small number of people covered has grown to more than a million. 

These plans are not right for everyone. For starters, they do not cover pre-existing conditions and most have exclusions for treatments and prescriptions that do not fall into the companies religious beliefs. For those who are healthy and agree with many of the rules there are many different plans that can provide comprehensive coverage at affordable costs. For those with access to group insurance and employer sponsored benefits these can be an affordable way to cover dependents. 

Some of the most popular plans are: Medi-Share, Christian Healthcare Ministries, Samaritan Ministries International, Altrua HealthShare, Aliera Healthcare and several others. While we do not sell individual policies we thought it prudent to make this information available for those looking for affordable options. 

Here is a great article with additional information. 

Posted on 02/05/2018 12:40 PM by David Moore
Wednesday, 27 December 2017

While this does not affect any of our Tennessee clients, it appears many companies with more than 50 employees have been hoping to not get noticed for not offering qualified, affordable health insurance and employee benefits to their employees. As the time nears to prepare 1094 and 1095 reporting to show which of your employees were offered and covered by group health insurance, this also lets the IRS know which companies are participating (or not). 

This also creates the opportunity for the IRS to send out letters in error to businesses who are actually complying or have fewer than 50 "full time equilivent" employees. These IRS letters are time sensitive and it can be very complicated to dispute so better to address the problem early than put it on the back burner. 

Read more here

Posted on 12/27/2017 8:22 AM by David Moore
Thursday, 21 December 2017

There are many significant changes in the new tax code for 2018. My CPA put together many of things to consider for year end tax planning. No, not much to do with your employee benefits and health insurance but very important none the less. 

Read more here

Have a Merry Christmas, Happy Holidays and may 2018 be your best year yet. 

David Moore

Benefit Brokers, LLC

Posted on 12/21/2017 3:17 PM by David Moore
Tuesday, 05 December 2017

Aetna’s Outgoing CEO Set to Reap About $500 Million if CVS Deal Closes

Mark Bertolini to benefit from up to $85 million of exit pay plus existing rights and stock that are worth more because of the deal see more

To me, this is not right. Maybe he could give some back to the premium payers. 

Posted on 12/05/2017 4:15 PM by David Moore