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Comparative Effectiveness Research Fee (CERF) Toolkit

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Comparative Effectiveness Research Fee (CERF) Toolkit

Your responsibilities under CERF 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.

IRS Form 720 *

CERF Fact Sheet

Detailed CERF Payment/Due Date Grid

CERF Member Life Report Access Instructions

Useful Information

Executive Summary

The health care reform law includes a new “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, 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.

What Employers and Plans are Affected by the Comparative Effectiveness Research Fee?

  • 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-funded group medical plans, maintained in the United States
  • Individual/family plans
  • Standalone behavioral health plans (insured and self-funded)
  • Standalone pharmacy plans (insured and self-funded)
  • 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

What Employers and Plans are Exempted from the Comparative Effectiveness Research Fee?

  • 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)
  • Standalone dental plans
  • Standalone vision plans
  • Employee Assistance Plans (EAPs)
    • Note: Some EAPs were included in the proposed rule; the final rule excluded them

Who is Responsible for Administering Payment of the Comparative Effectiveness Research Fee?

  • If your plan is insured, you will not need to do anything. Your insurer or HMO is responsible for paying the fee based upon the number of covered lives. If you offer a HRA or non-exempt FSA, these are considered to be self-insured for CERF. Reference the "How is Cigna assisting insured employers" question below for more detail.
  • For self-funded plans, 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.

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 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. We will also post a confirmation of payment at the top of this toolkit.

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 critical information you need to know about the PPACA. For a comprehensive overview of the law’s other fees and taxes, please be sure to look into our Fees & Taxes page.

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