Comparative Effectiveness Research Fee (CERF)

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Executive summary

The health care reform law includes a new “Comparative Effectiveness Research Fee” (CERF) for insurers and self-insured plans to fund research that determines the effectiveness of various forms of medical treatment. The Internal Revenue Service (IRS) issued its final rule on this provision on December 5, 2012.

 

The fee applies on the first day of the policy/plan year beginning on or after October 2, 2011 and continues to apply through policy/plan years ending before October 1, 2019. (These dates are based upon the federal government’s fiscal year of October 1 through September 30.)

 

The fee is classified as a tax, and it will be reported and paid to the IRS via Form 720 Federal Excise Tax Return. Currently, Form 720 is a quarterly reporting form, and is being revised by the government to account for this annual fee. We expect to receive updated forms and filing instructions and will keep you informed.

 

The fee is based on the average covered lives for the applicable 12-month policy/plan year, and is payable on July 31 of the calendar year that follows the year in which the policy/plan year ends.

Fee applies to

• All insured group medical plans, including minimum premium plans, issued by one of our U.S. underwriting companies except where exempted by the legislation
• Self-insured group medical plans, maintained in the United States
• Individual/family plans
• Stand-alone behavioral health plans (insured and self-insured)
• Limited medical plans (also known as Voluntary plans)
• Medicare Surround and Medicare Expand insurance policies
• Retiree-only plans
• Health Reimbursement Accounts (HRAs)
• Flexible Spending Accounts (FSAs) that do not qualify as “excepted benefits” under HIPAA
• Cigna Global Health Benefits inpatriate plans, issued by one of our U.S. underwriting companies

Fee does not apply to

• Expatriate coverage provided primarily for employees who work and reside outside the U.S.
• U.S.-based “trailing dependents” of expatriate employees who live overseas
• Exempt FSA plans
• Medicare Parts A-D coverage
• Medicaid coverage
• Health Savings Accounts (HSAs)
• Stand-alone dental plans
• Stand-alone vision plans
• Employee Assistance Plans (EAPs)
  • Note: Some EAPs were included in the proposed rule; the final rule excluded them

Fully insured medical plans: Your role and Cigna's support

Fully insured medical plans
Per the regulations, Cigna will pay the required fee with respect to its insurance policies and HMO service agreements. The fee will be reflected in your premium. You will not need to do anything for your insured/HMO medical plan to be compliant. We will file the 720 Tax Form for you.

 

Health Reimbursement Accounts (HRAs) and non-exempt Flexible Spending Accounts (FSAs)
HRAs and qualifying FSAs* are considered self-insured group health plans. As a plan sponsor, you will be required to pay the fee for employees and dependents covered under those plans. (*Qualifying FSAs are those where the employer contribution is greater than $500, and that is more than what the employee contributes.)

 

If your HRA and FSA have the same plan year as your self-insured medical plan, then both plans are treated as a single group health plan and only one fee is payable by you. However, if your medical plan is insured, Cigna will pay the fee for the insurance policy, but you will pay the fee for your HRA or FSA.

 

Cigna support
Cigna will support your compliance by providing access to data about your covered HRA/FSA lives through self-service reporting. You will not incur an additional charge for this service. Full medical eligibility data will not be available.

 

Access to these reports became available on February 19, 2013 at your customary web-based eligibility-reporting portal.

 

Client Resource Portal – click here for sample report and instructions and log into your portal at: www.cignaclientresources.com.

 

NOTE: You should refer to the Summary report to obtain the reporting fee totals. The Detail report may not match the summary totals due to changes in family status, or benefit coverage that takes place after the date the summary data was captured.

 

OR

 

 CignaAccess

CERF CignaAccess Summary Report
CERF CignaAccess Detail Report
– click here for sample report and instructions and log into your portal at: www.cignaaccess.com.

Self-insured medical plans: Your role and Cigna's support

The plan sponsor is responsible for paying the fee. Per the legislation, administrators like Cigna are not permitted to calculate or pay the fee on the plan’s behalf.

 

Health Reimbursement Accounts (HRAs) and non-exempt Flexible Spending Accounts (FSAs)

HRAs and qualifying FSAs* are considered self-insured group health plans. As a plan sponsor, you will be required to pay the fee for employees and dependents covered under those plans. (*Qualifying FSAs are those where the employer contribution is greater than $500, and that is more than what the employee contributes.)

 

If your HRA and FSA have the same plan year as your self-insured medical plan, then both plans are treated as a single group health plan and only one fee is payable by you.

 

Cigna will support your compliance by providing access to data about your covered lives through self-service reporting – at no additional cost.

 

Access to these reports became available on February 19, 2013 at your customary Web-based eligibility-reporting portal.

 

Client Resource Portal – click here for sample report and instructions and log into your portal at: www.cignaclientresources.com

 

NOTE: You should refer to the Summary report to obtain the reporting fee totals. The Detail report may not match the summary totals due to changes in family status, or benefit coverage that takes place after the date the summary data was captured.

 

OR

 

 CignaAccess

CERF CignaAccess Summary Report
CERF CignaAccess Detail Report
– click here for sample report and instructions and log into your portal at: www.cignaaccess.com.

 

Cigna Behavioral Health Plans: Your role and Cigna's support

Reports will be available on request. Please contact your account representative.

Cigna Global Health Benefits: Your role and Cigna's support

Fully insured expatriate medical plans
The final regulations indicate that most expatriate plans (i.e., those specifically designed to cover primarily employees working outside the U.S.) are exempt from the CERF. The fee may apply to some plans covering inpatriates. In the limited cases when the fee may apply, CGHB will make required payments for impacted fully-insured clients. You will not need to do anything for your medical plan to be compliant.

 

Self-insured expatriate medical plans
The final regulations indicate that most expatriate plans (i.e., those specifically designed to cover primarily employees working outside the U.S.) are exempt from the CERF. The fee may apply to some plans covering inpatriates. Self-insured expatriate plans should consult their legal and tax consultants to determine whether their plans are subject to the CERF. In the limited cases when the fee may apply, the plan sponsor is responsible for paying the fee. Per the legislation, administrators like Cigna are not permitted to calculate or pay the fee on the plan’s behalf. Please contact your Cigna client manager for additional details.

Cigna Voluntary Limited Medical Plans: Your role and Cigna's support

Fully insured medical plans

 

Per the regulations, Cigna will pay the required fee with respect to its limited-medical policies. You will not need to do anything for your limited-medical plan to be compliant. You do not need to request eligibility reports from Cigna. We will file the 720 Tax Form for you. You will not incur an additional charge for this service.