Non-COVID-19 Updates: COBRA Notices, HSA Limits, PCOR Fees, Oh My!

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While the recent focus of many organizations has been on impact to benefits based on the COVID-19 pandemic, other significant updates been released. Below, you will find updates regarding COBRA notices, HSA limits, and PCOR fee requirements.

Updated COBRA Model Notices

In early May, the Department of Labor (DOL) released updated COBRA model notices. The updated notices included clarifying information related to Medicare, when an individual can enroll in Medicare, and how Medicare coordinates with COBRA. The model notices, and a FAQ about updates to the model notices, can be found on the DOL website.

Using the model notice is not mandatory, and while the updated information is not required to be in a COBRA Election Notice, Employee Benefits Corporation has updated our notices to include similar information.

2021 HSA Limits Released

The Internal Revenue Service (IRS) has released Revenue Procedure 2020-32 that provides the Health Savings Accounts (HSA) limits for 2021.

The 2021 amounts for HSAs as compared to 2020 are as follows:

View Employee Benefits Corporation's full plan limits table by clicking here. A printable version of the full table is available on this page.

The annual contribution maximum for 2021 will be increasing by $50 for individuals with self-only HSA qualified HDHP coverage (to $3,600) and increasing by $100 for individuals with family HSA qualified HDHP coverage (to $7,200). The maximum catch-up contribution for eligible account holders over age 55 will remain at $1,000. 

The minimum deductibles for a High Deductible Health Plan (HDHP) to be HSA qualified are not changing from 2020 to 2021. The minimum deductible for self-only coverage will remain at $1,400. The minimum aggregate deductible for family coverage will remain at $2,800. HSA-compatible HRAs will continue to use these minimum deductibles for 2021.

Please remember, if your plan uses an embedded deductible, in order to remain HSA qualified the deductible one individual on family coverage must meet before the plan pays is $2,800.

To be an HSA qualified plan, a HDHP also must meet required out-of-pocket maximum limits. These limits have increased for 2021 and can be no greater than $7,000 for single coverage (increase of $100 from $6,900 in 2020) and $14,000 for family coverage (increase of $200 from $13,800 in 2020).

The Department of Health and Human Services (HHS) released the 2021 maximum out-of-pocket limits for non-grandfathered plans mid-April 2020. The 2021 maximum for individuals with self-only coverage is $8,550, and the maximum for those enrolled in family coverage is $17,100. 

It is important to note that you can have a plan design that is compatible with the Affordable Care Act (ACA), but is not compatible with the HSA rules.  The ACA out of pocket maximums are higher than what is permitted to be considered to be an HSA compatible HDHP.

2020 PCOR Fee Requirement

Each year, employers must wait for the Internal Revenue Service (IRS) to update Form 720 in order to pay their PCOR fees with the correct form. On June 12th, the IRS released the updated Form 720 and Form 720 Instructions, which can then be used to file the PCOR fees due July 31, 2020. 

As you may recall, the Patient-Centered Outcomes Research (PCOR) fee is used to fund research on patient outcomes. As part of the Affordable Care Act (ACA), employer-sponsored health plan(s) are subject to PCOR fees.

  • Employers with Health Reimbursement Arrangements (HRAs) that are integrated with major medical plans pay a PCOR fee on the HRA. Insurers pay a PCOR fee on the insured plan.
  • Employers with self-funded health plans that are integrated with an HRA are required to pay a fee only on one plan.
  • Non-excepted Health Care FSAs (HCFSAs) are also subject to the fee. Employers are responsible for the payment.

Initially, the PCOR fees were set to apply only to plan years ending on or before September 30, 2019, however, in December 2019 the PCOR fees were extended for an additional 10 years.

On June 8, 2020, The IRS released IRS Notice 2020-44, which provided the rate of $2.54 for policy and plan years that end on or after October 1, 2019 and before October 1, 2020. In addition to the new rate, Notice 2020-44 provided transition relief which allows for added flexibility for the count method used for plans that were not origionally scheduled to file this year (plans ending on or after October 1, 2019 and before October 1, 2020). 

The PCOR fees due by July 31, 2020 include plan years ending in 2019. The table below includes the applicable fee amount per covered life based on applicable plan year end date.

Filing Due Date

Plan Years

Fee

July 31, 2020

Plan years ending on or after January 1, 2019 through September 30, 2019.

$2.45

July 31, 2020

Plan years ending on or after October 1, 2019 through December 31, 2019. 

(this includes calendar year plans)

$2.54

PCOR fees are payable on IRS Form 720 in the 2nd quarter of the calendar year following the end of the applicable plan year and are due by July 31st.

For more information please see our PCOR Fee Flyer.

Employee Benefits Corporation will send out an announcement to EBC HRA clients when the forms and instructions become available and we will continue to monitor any guidance that may postpone any filing requirements.

Please monitor the following links for updates to the forms and instructions:

Form 720 https://www.irs.gov/pub/irs-pdf/f720.pdf 

Form 720 Instructions https://www.irs.gov/pub/irs-pdf/i720.pdf

Categories: Benefits in General, Compliance | Tags: HSA , Health Savings Account , 2021 Limits , Rev. Proc. 2020-32 , PCOR fee , Patient Centered Outcome Research Fee , July 31 , IRS Form 720 , COBRA Model Notices | Return