While relief from the summer heat may be found in the air conditioning of a movie theater or mall or at the local pool, there is no similar respite for employee benefit plan sponsors from the compliance cycle that won't be letting up this time of year. Here are the key compliance items you should be aware of as the summer progresses:


These fees are collected from health insurance issuers and sponsors of self-insured health plans. PCORI is short-hand for Patient-Centered Outcomes Research Institute, a government-sponsored organization created by the Affordable Care Act, with the directive of advancing the quality and relevance of evidence-based medicine, and funded by the collection of these fees. PCORI fees are scheduled to run for plan years ending through September 30, 2019.
  • WHEN - No later than July 31 following the last day of the immediately preceding plan year.
  • WHICH PLANS - Accident and health coverage, major medical coverage, including retiree-only plans. Non-excepted benefits FSAs and HRAs.
  • WHO IS COUNTED - All individuals covered during the plan year, including retirees and COBRA participants, and their covered dependents.
  • HOW MUCH - Based on the average number of covered lives during the plan year:
    • $1.00 per covered life for plan years ending up to September 30, 2013;
    • $2.00 per covered life for plan years ending up to September 30, 2014.
  • HOW TO PAY - The fees for fully insured plans are paid by the carrier. Sponsors of self-insured plans will pay the fee with their 2014 second quarter Federal Excise Tax Return using IRS Form 720.
Sponsors of self-insured plans can choose from three counting methods to arrive at the average number of covered lives: the snapshot method, the actual count method or the Form 5500 method. In general, separate fees apply to a covered life for each plan by which it is covered except in the case of coverage by multiple self-insured plans which have the same plan year and sponsor, (e.g. an HRA and health plan). Plan sponsors may assume one life for each covered employee in an HRA or FSA.  Additional details of how each of the counting methods works are available at the IRS PCORI page.


Employers in the San Francisco Bay Area with 50 or more employers have until September 30 to register and offer their employees certain commuter benefits under the new Bay Area Commuter Benefits Program. The Program is being led jointly by the Bay Area Air Quality Management District (BAAQMD) and the Metropolitan Transportation Commission (MTC). Employers have the following four commuter benefit options to choose from and offer to their employees working 20 hours or more per week:
  1. Allow employees to exclude their transit or vanpool costs from taxable income, to the maximum amount allowed by federal law (currently $130 per month).
  2. Provide a transit subsidy (or transit pass) or vanpool subsidy up to $75 per month.
  3. Provide free or low cost bus, shuttle or vanpool service operated by or for the employer.
  4. Provide an alternative commuter benefit that is as effective in reducing single occupant vehicles as Options 1-3. Employers may choose from a pre-approved list or submit their own program for approval.
We recommend that you begin working with your employee benefits consultant now to review the options, implement your program, and build a process so you can be confident in your program’s compliance. Depending on your organization's circumstances, you could find that the payroll tax savings will balance the cost of the program you put in place, not to mention providing some harder to measure benefits such as reduced employee stress and greater retention. Employers in San Francisco and Richmond have already been subject to similar requirements. Employers in those jurisdictions with 50 or more employees will now report their compliance under the new Program, while those employing under 50 will continue reporting to their local jurisdiction. Remember that even if you already have one or more of these commute options in place, you still need to register with the ProgramFor more information visit the Program's website or see our related April blog post.


And lastly, another IRS-related compliance deadline for calendar year plans. If you are required to file an Annual Return/Report of Employee Benefit Plan (Form 5500) with the Department of Labor for your employer sponsored group health plan, (generally plans with 100 or more participants at the beginning of the plan year), you have seven months from the end of the plan year to file. For calendar year plans, this means a July 31 deadline. Hopefully this hasn't just raised alarm bells at your office, but in case it has, you can request a filing extension of up to two and a half months as long as the request is made prior to the normal filing deadline. Following the filing of the 5500, you must provide plan participants with a Summary Annual Report (SAR) no later than two months following the filing deadline, (plans with a filing extension have an additional two months). The SAR is a narrative summary of the information provided in the 5500 filing and notifies participants about how they can request a full, free copy of the annual report. Most employer sponsored pension plans, including profit-sharing plans, stock bonus plans, money purchase plans, 401(k) plans, 403(b) plans, and IRA plans, are also required to Form 5500 with the same timetable, regardless of the number of plan participants. Unless you have an in-house tax department, your employee benefits consultant will probably be managing this process for you. If you haven't heard from them and you think you may have a deadline looming, you will probably want to check in with them soon.


We hope this discussion has helped clarify some of the complex requirements of benefits compliance.  i2i Benefits and Insurance Services will continue bringing you updates on benefit compliance and related topics throughout the summer and into the busy renewal season. From all of us, have a safe and fun-filled Independence Day!