Part II

In Part I of our HR compliance series, we explored the pivotal role of HR technology in streamlining compliance processes for midsize businesses. We covered the critical need for adhering to EEO reporting requirements and the importance of keeping up-to-date with legislative changes. As we move into Part II, we will delve deeper into the complexities of HR compliance, focusing on GAG Clause Prohibition, PCORI Fee Filing and the nuances of the Family and Medical Leave Act (FMLA). This continuation is designed to further empower businesses with the knowledge to manage their HR responsibilities effectively and ensure a compliant, efficient workplace.

Form 5500 Reporting: A Post-Enrollment Requirement

For midsize businesses managing employee benefit plans, filing Form 5500 within six months after initial enrollment is crucial. This form reports information about the plan’s financial condition, investments and operations, making it an essential tool for ensuring compliance with the Employee Retirement Income Security Act (ERISA).

GAG Clause Prohibition Compliance

Staying compliant with the GAG Clause Prohibition, which has a December 31 deadline, is another key area. Companies that don’t comply with filing requirements could face a $100 daily excise tax as per the IRS Code or a civil penalty under ERISA. This clause prohibits GAG clauses in contracts between health providers and health insurers, ensuring that pricing and quality information is accessible.

The following is an example of a GAG clause: “In accordance with this agreement, the service provider agrees not to publicly disclose any details regarding the pricing, discounts or the specific terms of this contract without prior written consent from the company. This includes, but is not limited to, discussions with media, competitors or other entities outside the organization.”

PCORI Fee Filing: Established By Affordable Care Act (ACA)

The Patient-Centered Outcomes Research Institute (PCORI) fee filing, due with the first quarter taxes, is another critical compliance aspect for midsize businesses. This fee, imposed on health insurers and plan sponsors, funds research to provide information

about the best available evidence to help patients make more informed decisions about healthcare.

PCORI fee filing applies to both self-insured and self-funded health plans. This fee, mandated by the ACA, is used to fund the Patient-Centered Outcomes Research Institute and is charged to health insurers and plan sponsors of self-insured health plans.

For self-insured plans, the responsibility to report and pay the fee falls on the plan sponsor, which is often the employer. In the case of self-funded plans, where the employer assumes the financial risk for providing health care benefits to its employees, the employer is also responsible for the PCORI fee.

This fee is reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return which can be found on irs.gov). It’s important for employers or plan sponsors to be aware of the deadlines and calculation methods for this fee to ensure compliance and avoid any penalties.

In addition to self-insured and self-funded health plans, the PCORI fee also applies to Health Reimbursement Arrangements (HRAs), including Individual Coverage HRAs (ICHRAs) and Qualified Small Employer HRAs (QSEHRAs).

For these types of arrangements:

ICHRAs: Since ICHRAs are considered self-insured health plans, the employer offering the ICHRA is responsible for reporting and paying the PCORI fee. This applies regardless of the size of the employer.

QSEHRAs: Similarly, for QSEHRAs, which are available to small employers that are not subject to the Affordable Care Act’s employer mandate, the employer is responsible for the PCORI fee.

In both cases, the fee is filed using IRS Form 720. It’s important for employers who offer these types of HRAs to be aware of their responsibilities regarding the PCORI fee. The fee is calculated based on the average number of lives covered under the plan or arrangement and is paid annually.

Thus, for HRAs including ICHRAs and QSEHRAs, it is the employers who are generally responsible for reporting and paying the PCORI fee, as they are considered plan sponsors of these self-insured arrangements.

Conclusion: Expanding Your Compliance Knowledge Part II

In Part II of our series on HR compliance for midsize businesses, we delved into essential topics such as Form 5500 Reporting, GAG Clause Prohibition Compliance, and PCORI Fee Filing, underscoring the criticality of each in the broader context of HR compliance. These areas are pivotal in ensuring not just adherence to legal mandates but also in promoting transparency, fairness and the overall well-being of employees.

As we navigate through these intricate compliance landscapes, it’s evident that the journey is multifaceted and requires continuous vigilance and adaptability. But remember, the exploration doesn’t conclude here. In the final installment of this series, Part III, we will explore the nuances of FMLA compliance, the WARN Act, FLSA standards, and COBRA compliance. These areas further emphasize the balance between meeting business needs and respecting employee rights, a balance crucial for any thriving organization.

For more insights on HR compliance for businesses with 20 or more employees, visit Cosmo Insurance Agency’s dedicated blog series at

https://cosmoins.com/counting-for-compliance-understanding-federal-employment-laws-by-employer-size/.

Mark Herschlag, the founder and CEO of Cosmo Insurance Agency, specializes in providing personalized insurance solutions. For more information, contact (201) 817-1388 or email [email protected].