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Comparative Effectiveness Research Fee (CERF) Toolkit

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Comparative Effectiveness Research Fee (CERF) Toolkit

Originally effective Oct. 2011 - 2019 (with final payments due in 2020), the CERF has been extended through 2029 (with final payments due in 2030) through spending agreements [PDF] passed by Congress and signed into law by the President on Dec. 20, 2019.

CERF payment responsibilities can be challenging to grasp. Since the federal government operates on an October 1 - September 30 fiscal year, but your plan/policy may run on a different twelve-month basis, the timing of your tax due date can seem complicated.

The annual CERF payment due July 31 corresponds with the second quarter filing dates per the IRS instructions. Links to the revised form and IRS instructions are below. Plan sponsors can file Form 720 electronically, but to do so, they must submit Form 720 through an approved transmitter and pay applicable service fees.

The 2020 CERF payments are due on 7/31/20.

Note: ERISA plan year is key

If your ERISA plan year and renewal date are different, use the ERISA plan year to calculate your fee per covered life and payment due date.

Note: ERISA plan year is key!

If your ERISA plan year and renewal date are different, use the ERISA plan year to calculate your fee per covered life and payment due date.

IRS Form 720 *

Detailed CERF Payment/Due Date Grid

CERF Member Life Report Access Instructions

Useful Information

Executive Summary

The Affordable Care Act includes a "Comparative Effectiveness Research Fee" (CERF) for insurers and self-funded 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, 2029. (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 Quarterly Federal Excise Tax Return, which was revised to accommodate this annual tax. Click here for IRS information and links.

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 Quarterly Federal Excise Tax Return, which was revised to accommodate this annual tax. Click here for information and links.

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.

For general details on what employers and plans are affected by the Comparative Effectiveness Research Fee, view the CERF details, found on the Informed on Reform Fees and Taxes page.

How is Cigna Assisting Insured Employers?

Insured medical plans

Per the regulations, Cigna will pay the required fee with respect to its insurance policies and HMO service agreements. The fee is calculated in your premium. We will file the 720 Tax Form for you.

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

HRAs and non-exempt FSAs are considered self-funded group health plans. As a plan sponsor, you will be required to pay the fee for employees covered under those plans. An FSA is exempt if it is an “excepted benefit” as defined in the tax code and the maximum benefit payable to any participant does not exceed two times the participant’s salary reduction election for the FSA for the year (or, if greater, $500 plus the amount of the participant’s salary reduction election).

If your HRA and FSA have the same plan year as your self-funded 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. For HRAs and FSAs, the plan sponsor can treat each plan as covering a single covered life.

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 are available at your customary web-based eligibility portal.

Client Resource Portal 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 for sample report and instructions and log into your portal at: www.cignaaccess.com.

How is Cigna Assisting Self-funded Employers?

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 non-exempt FSAs are considered self-funded group health plans. As a plan sponsor, you will be required to pay the fee for employees covered under those plans. An FSA is exempt if it is an “excepted benefit” as defined in the tax code and the maximum benefit payable to any participant does not exceed two times the participant’s salary reduction election for the FSA for the year (or, if greater, $500 plus the amount of the participant’s salary reduction election).

If your HRA and FSA have the same plan year as your self-funded medical plan, then both plans are treated as a single group health plan and only one fee is payable by you. For HRAs and FSAs, the plan sponsor can treat each plan as covering a single covered life.

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 are available at your customary web-based eligibility portal.

California Network plans

If you offer Network (Point-of-Service) plans to individuals in California, special circumstances may apply.

Client Resource Portal 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 for sample report and instructions and log into your portal at: www.cignaaccess.com.

How is Cigna Assisting Behavioral Health Plans?

Reports will be available on request. Please contact Cigna's ASO PPACA Fees & Reporting Resources team.

How is Cigna Assisting Global Health Benefits Plans?

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-funded 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-funded 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.

Brokers and self-funded employers should direct their questions about the Comparative Effectiveness Research Fee to Cigna's expanded ASO PPACA Fees & Reporting Resources by calling 1-855-275-0555, from 9:00 a.m. – 6:30 p.m. ET Monday through Friday, or via email at ASO_PPACA_Fees&Reporting@Cigna.com.

Please visit Informed on Reform, our web-based resource for the most current general information you need to know about the ACA. For an overview of the law’s other fees and taxes, please be sure to look into our Fees & Taxes page.

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