Understanding Reporting Requirements: Small Group Level-Funded Plans

Understanding health insurance reporting requirements can be daunting, especially since most small businesses don't have HR departments to help. As an employer who sponsors a level-funded employee health plan, it is important that you understand the reporting requirements in order to stay compliant.

Level-Funded Plans: A Hybrid Approach

Level-funded plans are a blend of self-insured and fully insured plans. They offer cost savings since costs are based on actual insurance risk. However, they come with unique reporting responsibilities, for which many are new to employers who have always had fully-insured plans.

There are 3 reporting requirements for employers who sponsor a level-funded plan:

1. Annual Reporting Forms:

   1. Forms 1094-B and 1095-B: Employers sponsoring level-funded plans must file these forms to report health coverage details to the IRS and employees. Form 1094-B acts as a transmittal sheet, while Form 1095-B provides detailed information about the coverage offered to each employee.

   2. The information required includes basic information about the employee, the employer, the specific covered individuals and dependents, including names, social security numbers, and coverage months.

   3. Since January 2024, employers with 10 or more forms must file electronically with the IRS.

   4. Many payroll companies are able to help with this requirement as they have all your employee data and know who has/has not enrolled in your group medical plan. Be sure to ask about the filing fees as they can be quite expensive.

2. PCORI Filings and Fees: The Patient-Centered Outcomes Research Institute (PCORI) fee is imposed on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans, including level-funded plans.

   1. Form 720: The fee is reported annually using Form 720, Quarterly Federal Excise Tax Return, due by July 31st.

   2. The fee is calculated based on the average number of lives covered during the policy or plan year, multiplied by the applicable dollar amount for the year.

   3. Most businesses have their CPAs help with this since they are already handling quarterly filings in many

      cases.

3. Gag Clause Prohibition Compliance Attestation Form: Annual report that must be completed and filed by the employer, stating that the level-funded plans are prohibited from entering into any agreements with a provider, network of providers, or entity offering access to a network of providers that directly or indirectly restricts the plan's ability to make specific data and information available to another party.

   1. GCPCAs are due annually by December 31st via an online website through CMS

It's important for employers to understand what is required of those who sponsor a level-funded health plan and to make sure the reporting gets done. However, the minimal reporting requirements are worth it considering the significant cost in premium dollars.