PCORI Fee Increase for Health Plans
On November 4, the IRS released Notice 2016-64 to announce that the health plan Patient-Centered Outcomes Research Institute (PCORI) fee for plan years ending between October 1, 2016 and September 30, 2017 is $2.26 per plan participant.
The Affordable Care Act created the PCORI to study clinical effectiveness and health outcomes. To finance the nonprofit institute’s work, a small annual fee — commonly called the PCORI fee — is charged on group health plans.
The fee is an annual amount multiplied by the number of plan participants. The dollar amount of the fee is based on the ending date of the plan year:
- For plan year ending between October 1, 2012 and September 30, 2013: $1.00.
- For plan year ending between October 1, 2013 and September 30, 2014: $2.00.
- For plan year ending between October 1, 2014 and September 30, 2015: $2.08.
- For plan year ending between October 1, 2015 and September 30, 2016: $2.17.
- For plan year ending between October 1, 2016 and September 30, 2017: $2.26.
For future years, the fee amount will be adjusted for inflation. The program sunsets in 2019, so no fee will apply for plan years ending after September 30, 2019.
Insurers are responsible for calculating and paying the fee for insured plans. For self-funded health plans, however, the employer sponsor is responsible for calculating and paying the fee. Payment is due by filing Form 720 by July 31 following the end of the calendar year in which the health plan year ends. For example, if the group health plan year ends December 31, 2016, Form 720 must be filed along with payment no later than July 31, 2017.
Certain types of health plans are exempt from the fee, such as:
- Stand-alone dental and/or vision plans;
- Employee assistance, disease management, and wellness programs that do not provide significant medical care benefits;
- Stop-loss insurance policies; and
- Health savings accounts (HSAs).
A health reimbursement arrangement (HRA) also is exempt from the fee provided that it is integrated with another self-funded health plan sponsored by the same employer. In that case, the employer pays the PCORI fee with respect to its self-funded plan, but does not pay again just for the HRA component. If, however, the HRA is integrated with a group insurance health plan, the insurer will pay the PCORI fee with respect to the insured coverage and the employer pays the fee for the HRA component.
Read IRS Notice 2016-64
DOL Announces New Online Tool to Help Workers, Employers Understand Medical- and Disability-Related Leave
On October 31, 2016, the Department of Labor released a new online tool to help employees and employers understand the medical and disability leave to which employees may be entitled to manage medical conditions and disabilities.
The new tool asks users a few questions, such as type of business or organization, workforce size and if the entity receives federal financial assistance; with that information, the advisor directs users to federal employment laws that apply and provides additional information. These laws include the Family and Medical Leave Act which provides eligible employees of covered employers up to 12 work weeks of leave in a 12-month period for certain reasons, among them the employee’s own serious health condition; and the Americans with Disabilities Act and other disability nondiscrimination laws, under which leave may be considered a reasonable accommodation.
The leave advisor is one of a series of Employment Laws Assistance for Workers and Small Businesses Advisors the department provides to help employers and employees understand their rights and responsibilities under federal employment laws.
Agencies Issue FAQs About Affordable Care Act Implementation Part 34
On October 27, 2016, the Departments of Labor, the Treasury, and Health and Human Services issued another set of frequently asked questions on the implementation of the Affordable Care Act (ACA). The FAQs About Affordable Care Act Implementation (Part 34) addresses questions about tobacco cessation and the financial requirements and treatment limitations imposed on mental health and substance use disorder (MH/SUD) benefits.
IRS Announces 2017 Retirement Plan Contribution Limits
On October 27, 2016, the Internal Revenue Service (IRS) released Notice 2016-62 announcing cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017. Many pension plan limitations will not change in 2017 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. Some items, though, will see minor increases. The following is a summary of the limits for 2017.
For 401(k), 403(b), and most 457 plans and the federal government’s Thrift Savings Plans:
- The elective deferral (contribution) limit remains unchanged at $18,000 for 2017.
- The catch-up contribution limit for employees aged 50 and over who participate in these plans remains at $6,000 for 2017.
For individual retirement arrangements (IRAs):
- The limit on annual contributions remains unchanged at $5,500 for 2017.
- The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000 for 2017.
For simplified employee pension (SEP) IRAs and individual/solo 401(k) plans:
- Elective deferrals increase to $54,000 for 2017, based on an annual compensation limit of $270,000 (up from the 2016 amounts of $53,000 and $265,000).
- The minimum compensation that may be required for participation in a SEP remains unchanged at $600 for 2017.
For savings incentive match plan for employees (SIMPLE) IRAs:
- The contribution limit on SIMPLE IRA retirement accounts remains unchanged at $12,500 for 2017.
- The SIMPLE catch-up limit remains unchanged at $3,000 for 2017.
For defined benefit plans:
- The basic limitation on the annual benefits under a defined benefit plan is increased to $215,000 for 2017 (from $210,000 for 2016).
- Highly compensated and key employee thresholds:
- The threshold for determining “highly compensated employees” remains unchanged at $120,000 for 2017.
- The threshold for officers who are “key employees” in a top-heavy plan increases to $175,000 for 2017 (from $170,000 for 2016).
- Social Security cost of living adjustment:
- In a separateannouncement, 2017 Social Security Changes, the Social Security Administration stated that the taxable wage base will increase to $127,200 for 2017, an increase of $8,700 from the 2016 taxable wage base of $118,500. Thus, the maximum Social Security tax liability will increase for both employees and employers.
IRS Announces 2017 Limits for Health FSAs and Transit Benefits
On October 25, 2016, the Internal Revenue Service (IRS) announced annual inflation adjustments for more than 50 tax provisions, including an increase in voluntary employee contributions to employer-sponsored healthcare flexible spending arrangements (HFSAs) to $2,600 for plan years beginning in 2017, up from the 2016 limit of $2,550.
The IRS also announced there will be no change in the monthly limits for qualified transportation fringe benefits under Section 132(f). For transportation in a commuter highway vehicle and any transit pass, the limit remains at $255. The monthly limit for qualified parking also is $255.
Details of this announcement can be found in the Revenue Procedure 2016-55, which is scheduled to be published in final format in early-November.
Court Issues Preliminary Injunction Blocking Fair Pay and Safe Workplaces Regulations
On October 24, 2016, U.S. District Judge Marcia Crone for the Eastern District of Texas enjoined implementation of the federal contractor reporting requirements and pre-dispute arbitration agreement restrictions set forth in recently released regulations under the Fair Pay and Safe Workplaces Executive Order 13673 (EO 13673).
On July 1, 2014, President Obama signed EO 13673 to require prospective federal contractors to disclose labor law violations and give agencies guidance on how to consider labor law violations when awarding federal contracts. Two years later, on August 25, 2016, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued a final rule (commonly referred to as the blacklisting rule) and guidance implementing the order.
Among other things, the final rule requires certain federal contractors to disclose adverse findings and decisions related to their compliance with federal and state labor and employment laws, and empowers federal agencies to deny contracts to employers who are deemed to lack a satisfactory record of integrity and business ethics based on such disclosures. The final rule also requires certain federal contractors to agree that the decision to arbitrate claims arising under Title VII, or any tort related to or arising out of sexual assault or harassment, be made only with the voluntary consent of employees or independent contractors after such disputes arise, subject to certain exceptions (e.g. employees covered by a collective-bargaining agreement). Learn more about the final rule here.
Shortly after the release of the final rule, the Associated Builders and Contractors of Southeast Texas, the Associated Builders and Contractors national organization, and the National Association of Security Companies sought an injunction to block implementation and enforcement of the contractor reporting requirements and prohibition on pre-dispute arbitration agreements.
Note that the injunction does not apply to other provisions of the final rule (i.e., pay transparency, or independent contractor notice requirements).
FTC and DOJ Release Guidance for HR Professionals on How Antitrust Law Applies to Employee Hiring and Compensation
On October 20, 2016, the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) issued guidance for human resource (HR) professionals and others who are involved in hiring and compensation decisions. The guidance is intended to alert HR professionals and others involved in hiring and compensation decisions to potential violations of the antitrust laws.
The FTC and the DOJ jointly enforce the U.S. antitrust laws, which apply to competition among firms to hire employees. An agreement among competing employers to limit or fix the terms of employment for potential hires may violate the antitrust laws if the agreement constrains individual firm decision-making with regard to wages, salaries, or benefits; terms of employment; or even job opportunities. HR professionals often are in the best position to ensure that their companies’ hiring practices comply with the antitrust laws. In particular, HR professionals can implement safeguards to prevent inappropriate discussions or agreements with other firms seeking to hire the same employees.
The agencies’ joint guidance includes a Q&A section that explains how antitrust law applies to various scenarios that HR professionals might encounter in their daily work lives. The guidance also includes a link to a list of red flags that HR professionals and others should look out for in the employment setting.