Many dealerships are probably familiar with completing the excise tax form for fuel and tires. Did you know it is also used to collect a tax on your health plan? The Affordable Care Act (ACA) largely left self-funded plans alone as they were already regulated by the Employment Retirement and Income Security Act (ERISA). Most the taxes imposed by the ACA were on the fully-insured plans and collected by the insurance companies providing coverage.
One of the few additional taxes imposed on self-funded plans is called the Patient Centered Outcomes Research Institute or PCORI tax. PCORI is a non-profit corporation established by the ACA in 2010 to fund research and determine the best therapies for prevalent conditions. The current tax rate is $2.26 per participant and it is indexed for future years until 2019 when it ends. While the tax is not particularly burdensome, understanding the filing requirement is generally unknown.
Any company that has a self-funded health plan, Flexible Spending Account (FSA) or Health Reimbursement Account (HRA) must file Form 720 by July 1, 2017. This includes employers that may pay the out of pocket expense for any employees but do not have a written HRA. Employers must be wary of creating a plan by simply paying for a deductible or any other out of pocket expense for an employee.
If your dealership is using an undocumented HRA to pay for out of pocket expenses, be sure to complete the PCORI section of Form 720. After that has been completed, take some time to properly document your dealership’s plan. In 2019, every company with a health plan will be required to file Form 5500 on July 1st. This new version will ask you if your plan is documented. If your plan is found to be lacking documentation, the plan and those responsible could be subject to penalties and fines.
The Equipment Dealers Association (EDA) has been very responsive to the requests of its members to help with regulatory compliance. EDA has negotiated a significant discount on benefit plan compliance service. Contact a representative at Visor to learn more about plan documentation and avoid the fines.
For more information, log onto www.erisaweb.com.
Bill Hill is the President of Visor, Inc.