The JA Advisor - May 2020

Summary of Material Modifications – No Material Reductions – Distribute SMM for any plan changes adopted at the beginning of the year that are not material reductions in plan benefits or services. This deadline only applies to group health plans that are subject to ERISA – July 29, 2020. 

• Under the Employee Retirement Income Security Act (ERISA), an SMM must be provided when there is a material change in the terms of the plan or any change in the information required to be in the summary plan description (SPD).
• As a general rule, the plan sponsor must provide the SMM within 210 days after the close of the plan year in which the change was adopted. A shorter deadline may apply in some circumstances, depending on the nature of the modification or change. If the change is a material reduction in group health plan benefits or services, the deadline for providing the SMM is 60 days after the change is adopted.
• Employers should communicate plan changes to participants as soon as possible to help avoid benefit disputes. When plan changes will take effect at the beginning of the upcoming plan year, employers may decide to include the SMMs in their open enrollment materials, if applicable.
• In addition, an updated SPD must be provided to participants at least every five years, if material modifications have been made during that period. If no material modifications have been made, an updated SPD must be provided at least every 10 years.

PCORI Fees (self-insured plans only, including HRAs) – Report and Pay PCORI Fees (self-insured plans only, including HRAs)

• Employers with self-insured health plans must pay an annual fee to fund the Patient Centered Outcomes Research Institute (PCORI). Self-insured health plans that are subject to PCORI fees include self-funded medical plans, as well as HRAs that are offered in conjunction with fully insured group medical plans. HRAs that are offered with self-insured group medical plans are not subject to separate PCORI fees if both the HRA and the self-insured medical plan have the same plan sponsor and the same plan year. Employers use IRS Form 720 to report and pay PCORI fees each year. These PCORI fees are due each year by the July 31 of the year following the last day of the plan year. The fees apply to plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2029 (updated from Oct. 1, 2019 by a December 2019 federal law).
• Note: if your plan was fully insured (not self-insured) during the applicable plan year, the insurance issuer will be responsible for reporting and paying PCORI fees for that year.