June 2022 Employee Benefits Compliance Alert
Release Date: June 15, 2022
1. PCORI Fee Payment Deadline: July 31, 2022
a. General Information
The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of specified health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI). The amount of the PCORI fee payable is equal to the average number of lives covered during the policy year or plan year multiplied by a dollar amount announced for each year (to reflect medical inflation for that year) as determined by the Secretary of Health and Human Services. For policy and plan years ending after September 20, 2021, and before October 1, 2022, the dollar amount is $2.79.
If your health plan is fully insured, your health insurer will determine and pay the PCORI fee.
If you have a self-insured health plan, the employer/plan sponsor will have responsibility for calculating and paying the PCORI fee. A Health Reimbursement Arrangement (HRA) can be considered a self-insured health plan, even if it is paired with a fully insured medical plan. Generally, but not always, a third-party administrator for a self-insured health plan will determine the PCORI fee payable for its client.
b. How to Count Individuals
Generally, all individuals who are covered during the policy year or plan year must be counted in computing the average number of lives covered for that year. Example: A self-insured health plan must count an employee and their dependent child as two separate covered lives, unless the plan is an HRA or flexible spending arrangement (FSA) but only if the FSA is “stand alone” and is not offered with a medical plan. Health plan sponsors are permitted to assume one covered life for each employee with an HRA or FSA.
An employer/plan sponsor of a self-insured health plan has the flexibility to use one of three different counting methodologies to determine the average number of lives covered for a plan year: (1) actual count method; (2) snapshot method; or (3) Form 5500 method.
- Actual Count Method with a Self-Insured Health Plan: Count the total covered lives for each day of the plan year and divide by the number of days in the plan year.
- Snapshot Method: Count the total number of covered lives on a single day in each quarter (or more than one day) and divide the total by the number of dates on which a count was made. (The date or dates must be consistent for each quarter.)
- Form 5500 Method: For self-insured-only coverage, determine the average number of participants by combining the total number of participants at the beginning of the plan year with the total number of participants at the end of the plan year as reported on the Form 5500 and divide by 2.
c. How to Pay the PCORI Fee: Form 720
A health insurance company will determine and pay the PCORI fee for any fully insured health plan. A plan sponsor/employer of a self-insured health plan, however, will need to submit Form 720, Quarterly Federal Excise Tax Return to the IRS. Form 720 will be due on July 31 of the year following the last day of the policy year or plan year. Electronic filing is available but not required. Payment will be due at the time the Form 720 is due.
More information on what type of health insurance arrangements could trigger PCORI fee responsibility can be found at the following IRS link:
https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangement.
Additional IRS PCORI Resources:
2. Department of Labor Releases FAQ Guidance on FMLA and Mental Health Challenges
As we wrap up Mental Health Awareness month (May), the Department of Labor (DOL) recently released FAQ guidance that addresses a variety of scenarios in which FMLA could be taken for mental health challenges confronting an employee, child, adult child, parent, and spouse. The guidance also addresses an employer’s responsibility to maintain FMLA medical-related records in a confidential fashion. Employers need to appreciate that mental health challenges can easily be considered a serious health condition under the FMLA.
Q: May I use FMLA leave when I am unable to work because of severe anxiety? I see a physician monthly for this condition to manage my symptoms.
Yes. Assuming that you work for a covered employer and are eligible for FMLA leave, you may take leave if you are unable to work due to a serious health condition under the FMLA. A chronic condition, whether physical or mental (e.g., rheumatoid arthritis, anxiety, dissociative disorders), that may cause occasional periods when an individual is unable to work is a qualifying serious health condition if it requires treatment by a health care provider at least twice a year and recurs over an extended period of time.
Q: I am under the care of a psychologist and attend psychotherapy sessions regularly for anorexia nervosa. Is my leave for treatment related to this condition protected under the FMLA?
Yes. Assuming that you work for a covered employer and are eligible for FMLA leave, you may take leave for treatment visits and therapy sessions for the condition. Under the FMLA, you may use available leave when you are unable to work, including being unable to perform any one of the essential functions of your position, due to a serious health condition or when you are receiving treatment for that condition.
Q: My daughter, who is 24 years old, was recently released from several days of inpatient treatment for a mental health condition. May I use FMLA leave for her care? She is unable to work or go to school and needs help with cooking, cleaning, shopping, and other daily activities.
Yes. Assuming that you work for a covered employer and are eligible for FMLA leave, you may use FMLA leave to care for your child who is 18 years of age or older if the child is incapable of self-care because of a disability as defined by the ADA, has a serious health condition as defined by the FMLA, and needs care because of the serious health condition.
A disability under the ADA is a mental or physical condition that substantially limits one or more of the major life activities of an individual, such as working. Major depressive disorder, bipolar disorder, obsessive compulsive disorder, and schizophrenia are a few examples of mental health conditions that may substantially limit one or more of an individual’s major life activities when active. A mental health condition requiring an overnight stay in a hospital or residential medical care facility would be a qualifying serious health condition under the FMLA.
Q: May I use FMLA leave to attend a family counseling session for my spouse who is in an inpatient treatment program for substance abuse?
Yes. Assuming that you work for a covered employer and are eligible for FMLA leave, you may use FMLA leave to provide care for your spouse who is undergoing inpatient treatment for substance abuse. Care could include participating in your spouse’s medical treatment program or attending a care conference with your spouse’s health care providers.
Q: When my father passed away, my mother began to see a doctor for depression and needs assistance with day-to-day self-care because of this condition. Currently, I use FMLA leave to take her to her medical appointments, and my sister stays with her during the day. May I also use FMLA leave to help my mother with her day-to-day needs?
Yes. Assuming that you work for a covered employer and are eligible for FMLA leave, you may use FMLA leave to provide physical and psychological care to your mother. You do not need to be the only individual or family member available to help to use FMLA leave for her care. Caring for a family member under the FMLA includes helping with basic medical, hygienic, nutritional, or safety needs and filling in for others who normally provide care.
Q: My spouse is a veteran who is suffering from post-traumatic stress disorder (PTSD) since his honorable service discharge last year. May I use FMLA leave for his care?
Yes. An eligible employee who works for a covered employer may use military caregiver leave under the FMLA to care for a relative who is a covered veteran undergoing treatment, recuperating, or in therapy for a serious injury or illness. A serious injury or illness is one that was incurred in the line of duty when the veteran was on active duty in the Armed Forces, including any injury or illness that resulted from the aggravation of a condition that existed before the veteran’s service in the line of duty on active duty. The condition may manifest itself during active duty or may develop after the service member becomes a veteran, as may be the case with PTSD, a traumatic brain injury (TBI), or depression, for example.
Q: I use FMLA leave once a month for appointments with a mental health therapist. Is my employer required to keep my mental health condition confidential?
Yes. The FMLA requires your employer to keep your medical records confidential and maintain them in separate files from more routine personnel files. Your employer must also maintain your records with confidentiality as required under other laws, such as the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA), where those laws also apply.
However, your supervisor and managers may be informed that you need to be away from work, or if you have work duty restrictions or need accommodations.
The FMLA prohibits your employer from interfering with or restraining your right to take FMLA leave. Your employer is prohibited, for example, from sharing or threatening to share information about your health to discourage you or your coworkers from using FMLA leave.
Q: My son is in the fourth grade and sees a doctor for attention-deficit/ hyperactivity disorder (ADHD). After I used FMLA leave to take my son to a behavioral therapy appointment for this condition, my employer sent me an email informing me that I received a negative point on my attendance record. Can my employer punish me for using FMLA leave?
No. Employers are prohibited from discriminating or retaliating against employees for having exercised or attempting to exercise any FMLA right. Examples include using the taking of FMLA leave as a negative factor in employment actions, such as in hiring, promotions, or disciplinary actions, or counting FMLA leave against employees in points-based attendance policies.
Other Mental Health Resources Promoted by the DOL Regarding FMLA:
Note: This alert constitutes compliance advice from the Fred C. Church Agency as your employee benefits broker and does not establish an attorney-client relationship with the recipient, who is free to consult with legal or tax counsel of their own choosing.
