News and Blog

Friday, 22 June 2018
Association Health Plans are coming. Right?

President Trump signed a new rule making it easier for small businesses to join forces and set up health plans that avoid many of the expensive ObamaCare rules. The new plans will be called "Association Health Plans" and they could be available as soon as September, 2018. 

What do these news plans look like? No telling since they are not able to deny coverage or charge higher rates for pre-existing conditions. These are two of the things that drive up costs in the small group market, so what's different about the new plans? That is a big question and based on what I am reading I don't see the attraction for the insurance carriers who are risk averse to begin with. 

For many small groups "Limited Funding" a type of self-insurance can accomplish what we think the Association plans are trying to do. "Limited Funding" plans allow you to underwrite your group medically and if you are healthy, you can qualify for much lower rates than the ACA pricing. This strategy has worked very well for many of our groups but you have to be healthy for it to work. 

More to come, at least they are trying different ideas to see what might work bring costs back down. 

Posted on 06/22/2018 4:28 PM by David A Moore
Tuesday, 19 June 2018
2017 PCORI fees due by July 31

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, 8 June 2018
Big changes coming for Obamacare?

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