The Patient Protection and Affordable Care Act (PPACA) imposes a new fee on group health plans to fund comparative effectiveness research. The fee is first due for plan years starting on Jan. 1, 2012, for calendar-year plans. However, as of September 2011, federal agencies had not yet issued final guidance on the fee.
On Sept. 7, 2011, the ERISA Industry Committee (ERIC) urged the U.S. Department of Treasury and Internal Revenue Service to not impose unnecessary administrative burdens or costs on employers when implementing the comparative effectiveness fee.
ERIC’s comment letter was in response to a June 2011 IRS request for comments regarding the implementation of the fee imposed on health insurers, self-insured health plan sponsors and third-party administrators. ERIC offered several recommendations on the methods and requirements for calculating the new fee, including that it should be easy and inexpensive to administer, and should not require employers to establish costly systems to determine the actual average number of lives covered under an applicable self-insured health plan.
“The fee and the associated administrative costs are real and immediate, and apply at a time when ERIC’s members are struggling to cope with a mounting roster of expensive health mandates, as well as increasing health care costs,” ERIC President Mark Ugoretz warned.
ERIC urged the agencies to adopt rules so that the fee is administered in a way that avoids duplication and does not require an employer to pay the fee more than once with respect to the same covered individual. “ERIC believes that this approach is consistent with the intent of the provision imposing the fee,” the letter said.
Safe Harbors Sought
To that end, ERIC recommends that employers be permitted to treat all accident and health benefits sponsored by an employer as one applicable self-insured plan for purposes of the fee. “If employers are not permitted to aggregate plans, an employer might be required to pay a higher fee merely because it has structured its accident and health coverage as separate plans for unrelated business reasons,” ERIC contended.
ERIC recommended that the agencies provide employers at least two safe harbor methods for determining the average number of covered lives that contain simplifying assumptions for determining the number of participants and dependents enrolled in self-insured plans, including one method based on the number of participants shown on the Form 5500 annual report filed for a plan. The second safe harbor would permit an employer to count employees each month and then average the monthly totals over the course of a year. ERIC also requested simplifying assumptions for counting the number of beneficiaries, a number often not tracked by employers.
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