Spending Bill Reauthorizes PCORI, Repeals Cadillac Tax
Credible Coverage Disclosure to the Centers for Medicare and Medicaid Services (CMS)
Overcoming Organizational Silos
Spending Bill Reauthorizes PCORI, Repeals Cadillac Tax
The Setting Every Community Up for Retirement Enhancement Act, better known as the SECURE Act, was signed into law on Friday, December 20. The SECURE Act is one of the most dynamic changes to retirement legislation since the Pension Protection Act of 2006, and addresses a wide variety of retirement planning topics. It also made some changes to some ACA provisions that affect Health & Welfare plans which is what we will address here. 
The bill reauthorizes PCORI, the fee on plan sponsors of certain self-funded health plans and fully insured carriers to help fund the Patient-Centered Outcomes Research Institute. Originally under the Affordable Care Act, the fees would no longer have applied for plan years beginning after October 1 of this year, but the reauthorization ensures that the fees will be around for the next decade and it has been reauthorized until October 2029.
While insurance carriers are responsible for paying the fees for their health policies, employers are responsible for self-insured health coverage. That includes HRAs and health FSAs, so employers will want to re-familiarize themselves with when the fees apply and how to calculate what is owed. To learn more about calculating and paying PCORI fees, click here to visit the IRS website.
Compliance Note: The per employee per year amount has not been set for this year. For those plans ending after September 30, 2018 and before October 1, 2019 who are scheduled to report by July 31, 2020, the fee is $2.45. The history starting with the 2014-2015 timeframe has been $2.08, $2.17, $2.16, and $2.39. We anticipate the fee to be increased for the 2019-2020 period but do not have that information yet. We will let you know when it comes available.
Also as part of the year-end appropriations bill, the Affordable Care Act’s (ACA) so-called 40% “Cadillac Tax” on high-cost health plans was finally, after much lobbying and other efforts by sponsors and health care payers, put to an end with a full repeal. The “Cadillac Tax” was currently scheduled to take effect in 2022 (after two delays), and would have taxed employer-sponsored plans worth more than $10,200 for “self-only” coverage and $27,500 for other coverage (in 2018 and would have been indexed for inflation in future years). The tax was initially intended to help reduce health care costs and pay for the ACA.
Compliance Note: Plan sponsors should note, however, that the reporting of the value of employer-provided coverage on the Form W-2 in Box 12, using Code DD, did not change. As a result, employers should continue to report the value on Form W-2.
As part of the same bill, two other ACA taxes were also repealed: (i) the health insurance tax, and (ii) the 2.3% tax on medical devices. While the repeal of the medical device tax is effective beginning in 2020, the repeal of the health insurance tax is not effective until 2021. The health insurance tax was on fully-insured health plans so self-funded plans aren’t affected by this change.
Credible Coverage Disclosure to the Centers for Medicare and Medicaid Services (CMS)
Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), group health plans that currently provide prescription drug coverage to Medicare Part D eligible individuals have two annual disclosure obligations. First, the Centers for Medicare & Medicaid Services (CMS) requires entities to provide a notice to all Medicare Part D eligible individuals disclosing whether the entities’ prescription drug coverage is “creditable,” i.e., whether the prescription drug coverage is equal to or better than the drug coverage offered under Medicare 
Part D. The deadline for providing the disclosure notices to Part D eligible individuals was October 15, 2019. Second, under the MMA, entities are also obligated to advise CMS as to whether or not the entities’ prescription drug coverage is “creditable.”
A. Timing of Disclosure Notice to CMS
The deadline for notifying CMS as to whether an entity’s coverage is “creditable prescription drug coverage” is sixty (60) days after the beginning of the plan year. For 2020 calendar year plans, the deadline is March 1, 2020. Disclosure to CMS must also be made within 30 days after any change in the “creditable” coverage status of any prescription drug coverage.
B. Manner of Disclosure Notice to CMS
A plan is required to provide the Disclosure to CMS Form (“Disclosure Form”) through completion of the form on-line at the CMS Creditable Coverage Disclosure Web Page at:
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/CCDisclosureForm.html
This is the sole method for complying with the CMS disclosure requirement. The following plans that provide prescription drug coverage to Medicare Part D eligible individuals are required to go on-line and complete the required Disclosure Form by the deadline indicated above:
1. Group health plans offered by employers.
2. Taft-Hartley plans.
3. Church Plans.
4. Federal, State, and Local government plans.
IMPORTANT NOTE: If your plan already applied for the Retiree Drug Subsidy Program, you are not required to submit the on-line Disclosure Form to CMS, as CMS has deemed your application as in full compliance with this disclosure obligation.
C. Content of Disclosure Notice to CMS
CMS requires certain information be made available to it relating to this disclosure obligation, including but not limited to, the name of the entity offering prescription drug coverage; the address, phone number and Federal Tax Identification Number of the entity; type of coverage being offered; the number of Part D eligible Individuals expected to be covered under the plan; the date the Notice of Creditable Coverage was provided to Part D eligible individuals; and the name, title, and email address of the entity’s authorized individual.
WHAT YOU NEED TO DO
- Print the following Helpful Tips When Completing On-Line Disclosure to CMS.
- Go on-line and complete the Disclosure Form to CMS by March 1, 2020 (for 2020 calendar year plans).
Helpful Tips When Completing On-Line Disclosure to CMS
- The Name of Entity should be the name of the Employer sponsoring the plan.
- Use the Federal Tax ID Number listed in your Plan Document/SPD.
- Under “Coverage Type”, choose only one sub-category under the “Group Health Plan” choices. Please note that a group health plan may have a number of different options, coverages, etc. A separate on-line disclosure is not required to be completed.
- Under the Section “Creditable/Non-Creditable Offer,” choose one of the three choices available. For many of you, the choice will be “All Options Offered Are Creditable”. After you make your selection, additional information specific to your plan will be requested. You will be asked to provide the following:
- The beginning and ending date for your Plan Year. Examples: A plan that runs on a calendar year basis should use 01/01/2020 to 12/31/2020. A Plan Year that begins February 1st should use 02/01/2020 to 01/31/2021.
- You will be asked to provide the number of Part D Eligible Individuals expected to have prescription drug coverage under your plan. Please keep in mind that this only needs to be an estimate of the number of individuals covered under your plan that are 65 years of age or older, or disabled individuals under the age of 65.
- You will also be asked to provide the number of Retirees covered under your plan who are Part D Eligible Individuals. If you do not provide any retiree coverage, please enter “0”. For those plans providing retiree coverage, you only need to provide an estimate of the number of retirees covered under your plan who are Part D Eligible Individuals.
- You need to provide the date that you sent/provided the notice of creditable coverage to all participants or to the participants over the age of 65. For many of you, please note that this date should be prior to October 15, 2019.
- Lastly, you will be asked for the name, title and email address of the entity’s Authorized Individual. This means the person employed by the entity that is completing the on-line Disclosure Form. Then fill in the date and click “Review and Submit.” After you click “Submit,” you should see the following message: Success! Your form has been successfully submitted.
Please choose “yes” or “no” when asked whether your creditable coverage status changed from the last plan year. If you choose “yes,” you must provide 1) the effective date of this change, and 2) the date you disclosed to Medicare Part D Eligible Individuals about this change.
Additional information relating to the on-line Disclosure Form can be found at https://www.cms.gov/CreditableCoverage.
Overcoming Organizational Silos
A common issue found throughout various companies is the presence of organizational silos. Organizational silos occur when groups of people, typically within a department or subdepartment, are isolated from collaborating or sharing information with other departments or groups. Although organizational silos may form because a group doesn’t want to communicate with another team, some organizations simply fail to facilitate proper communication across departments.
To avoid silos from forming at your company, it’s important to encourage leadership teams to promote interdepartmental relationships and to help department leaders implement strategies to avoid forming these silos. If organizational silos go unresolved within your company, the overall quality of work and employee morale can greatly suffer.
How Can Organizational Silos Affect Your Company?
Let’s say a company’s marketing team and engineering team are at odds with one another—the engineers may not see any value in the marketing team, so they choose to not provide them with a full list of features for their new product. With an incomplete list of product features, the marketing team may be unable to develop a successful marketing strategy.
Longstanding organizational silos within a company can lead to animosity between departments, decreased productivity and even loss of revenue if not resolved. In fact, a recent poll showed that 86% of employees and executives attributed workplace failures to a combination of bad communication and lack of collaboration. To combat the formation of organizational silos at your workplace, it’s crucial to identify what situations may cause them to form.
What Causes Organizational Silos?
Although experts have found that issues among leadership can largely contribute to the formation of organizational silos, all employees can be guilty of forming their own subdepartment silos or actively isolating themselves from other departments. There are a variety of reasons why organizational silos may form within a company, including:
- A lack of communication between departments
- Departments competing for funds or other resources
- A team failing to understand or acknowledge the value of another department
- Company goals that are unclear or lost among department goals
- Important information poorly communicated throughout departments
Although some causes of conflict between departments may not be avoidable, steps can be taken to help prevent and overcome organizational silos.
Tips to Overcome Organizational Silos
In order to keep organizational silos out of the company, it’s important that all employees are working toward a healthy relationship between departments. Although it is primarily the responsibility of the leadership teams to break down any departmental barriers, all employees should be aware of the initiative and understand what they can do to help accomplish the goal.
To overcome organizational silos at your company, assist your leadership and executive teams in executing the following action items:
- Conduct regular company meetings. Company meetings can help reestablish company goals, and help department leaders realign themselves and their teams with company initiatives.
- Promote regular interdepartmental communication. It’s important for employees to collaborate and get to know employees from other departments. This can help open lines of communication and promote innovative ideas.
- Schedule a lunch or meeting with other departments. Getting various departments together to meet can help employees see the value in other departments and how their conjoined efforts help accomplish a common goal.
- Invite other teams to development kickoff meetings. If a department is kicking off something new, invite other teams that may be affected or could benefit from sitting in on the meeting. This can promote inclusivity and help employees gain a better understanding of another department.
- Rebuild trust. In some instances, organizational silos may exist from continuous disagreements or issues between departments. Try utilizing conflict resolution tactics to help resolve conflict between departments and help reestablish trust.
