IN THIS ISSUE
The IRS recently issued Notice 2024-83 to increase the Patient-Centered Outcomes Research Institute (PCORI) fee amount for plan years ending on or after Oct. 1, 2024, and before Oct. 1, 2025. The updated PCORI fee amount is $3.47 multiplied by the average number of lives covered under the plan.
For plan years that ended on or after Oct. 1, 2023, and before Oct. 1, 2024, the PCORI fee amount is $3.22 multiplied by the average number of lives covered under the plan.
The PCORI fee is imposed on health insurance issuers and self-insured plan sponsors to fund comparative effectiveness research. It applies through the plan or policy year ending before Oct. 1, 2029.
PCORI fees are reported and paid annually on IRS Form 720 (Quarterly Federal Excise Tax Return). These fees are due each year by July 31 of the year following the last day of the plan year. For plan years ending in 2024, the PCORI fee is due by July 31, 2025. Employers with self-insured health plans should have reported and paid PCORI fees for 2023 by July 31, 2024.
The PCORI fees are calculated based on the average number of covered lives under the plan or policy. This generally includes employees and their enrolled spouses and dependents unless the plan is a health reimbursement arrangement (HRA) or health flexible spending account (FSA). Final rules outline a number of alternatives for issuers and plan sponsors to determine the average number of covered lives.
In September 2024, federal agencies released a final rule to strengthen the requirements of the Mental Health Parity and Addiction Equity Act (MHPAEA). The final rule is designed to help ensure individuals do not face greater restrictions to obtaining mental health and substance use disorder (MH/SUD) benefits than they would face for medical/surgical (M/S) benefits.
Significantly, the final rule adds protections against more restrictive nonquantitative treatment limitations (NQTLs), such as network composition, out-of-network reimbursement rates and prior authorization requirements. For example, the final rule requires group health plans and health insurance issuers to collect and evaluate data related to the NQTLs they place on MH/SUD care and make changes if the data shows they are providing insufficient access.
The final rule generally applies for plan years beginning on or after Jan. 1, 2025; however, certain key requirements, such as the NQTL data evaluation requirements, apply for plan years beginning on or after Jan. 1, 2026.
The final rule also establishes minimum standards for developing comparative analyses to assess whether an NQTL, as written and in operation, complies with MHPAEA’s requirements. Plans and issuers that cover both M/S benefits and MH/SUD benefits and impose NQTLs on MH/SUD benefits must perform and document a comparative analysis of the design and application of each applicable NQTL.
In many cases, issuers and third-party administrators will help prepare comparative analyses for employer-sponsored health plans. However, the final rule requires the comparative analyses for ERISA-covered plans to also include a plan fiduciary’s certification that they have engaged in a prudent process and monitored their service providers.
Telehealth Exception Has Expired for Calendar-year HDHP/HSA Plans
In response to the COVID-19 pandemic, the U.S. Congress enacted legislation that temporarily allowed high deductible health plans (HDHPs) to provide benefits for telehealth services before plan deductibles were met. This relief became effective in 2020 and was repeatedly extended. It currently applies to plan years beginning before Jan. 1, 2025. This means the relief ended on Dec. 31, 2024, for HDHPs with the calendar year as their plan year.
As background, to be eligible for health savings account (HSA) contributions, individuals cannot be covered by a health plan that provides benefits, except preventive care benefits, before the minimum HDHP deductible is satisfied for the year. Generally, individuals who are covered by telehealth programs that provide free or reduced-cost medical benefits are not eligible for HSA contributions. However, due to the pandemic-related relief, HDHPs have been able to waive the deductible for telehealth services without jeopardizing individuals’ HSA eligibility.
Starting in 2025, providing telemedicine benefits other than just preventive care at no cost (or low cost) to participants makes them ineligible for HSA contributions. There has been bipartisan support to extend telemedicine relief for HDHPs either permanently or temporarily; however, Congress failed to extend this relief at the end of 2024. It remains to be seen if Congress will revive this relief in 2025.
Action Steps
Employers with HDHPs should review their health plan’s coverage of telehealth services to determine if changes should be made for the plan year beginning in 2025. For plan years beginning in 2025, the minimum HDHP deductible is $1,650 for self-only coverage and $3,300 for family coverage. Any changes to telehealth coverage should be communicated to plan participants through an updated summary plan description or a summary of material modifications.
©2025 Zywave, Inc. All rights reserved.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the HealthSure, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. HealthSure and Alera group are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
