Sabbaticals Can Benefit Employees and Employers

Have your employees taken a sabbatical before? Sabbaticals are extended breaks from work without an employee actually leaving their position, allowing employees to take time to travel, spend time with family, volunteer, etc. Continue reading this blog post from UBA for how sabbaticals can actually benefit employees and employers.


While many employees may be dreaming of a short summer vacation, others could have a longer block of time off in mind. Sabbaticals, whether paid or unpaid, are extended breaks from work without leaving a position. A sabbatical gives an employee the opportunity to take time to travel, spend time with family, do something meaningful or volunteer, pursue a long-held goal, learn something new, or simply recharge.

Many employers would agree that a recharged employee is a more engaged and productive employee. In fact, some firms require newly promoted senior employees to take a sabbatical before beginning their next role. And one noted example, designer Stefan Sagmeister, closes his studio for a full year every seven years. It might be the most direct modern use of the origin of the word sabbatical, which come from the Hebrew word forrest and relates to the practice of letting land lie fallow for a year every seven years so it can remain productive.

Beyond fallow time for land, the idea of a sabbatical has been around for years, particularly in academia says Fast Company. Still, Workforce reports that in 2017 less than 20 percent of companies offered a sabbatical program. Most offer them to certain employees, like those getting a promotion to senior level, or management who’ve served over five years. It’s interesting to note, though, that the number jumps to a quarter of employers on a list of 100 best companies to work for compiled by Fortune.

A company without an explicit sabbatical policy may want to consider developing one, or can expect to be asked about it, says the Harvard Business Review. For an employee who presents a well-considered proposal and is able to show their value to the company, it may be a wise investment. When weighing the value of the sabbatical for the employee, consider what may be in it for the employer, like the acquisition of new skills or perspectives, that can be brought back to the workplace. Employees who have successfully taken a sabbatical report feeling more resilient, focused, ambitious innovative, and engaged. They’re also more appreciative of their workplace and employer, which can lead to improved employee loyalty and retention.

A sabbatical program would be appealing to new hires, especially in a tight job market or when recruiting Millennials, who value meaning over making money. In order to not miss out on a qualified candidates, consider a gap in a work history with curiosity about a potential sabbatical they’ve taken, says The Muse. If your company is ready to support a sabbatical, just be sure the recipients have a plan for limiting impact on other employees so burnout isn’t simply transferred or resentment created. Be mindful, too, that the employee is aware of whether an extended leave would impact promotion or raise timing.

Not ready to offer a longer-term paid sabbatical? An employee may be open to an unpaid sabbatical. If that’s not an option, encourage employees to take their vacation time since more than half of workers finished 2018 with unused time off. Or, create one day a month or even an hour a week that’s dedicated to non-required tasks or meeting expectations. See what your employees can do with time delegated to freedom to explore.

Read more:

Thinking About Taking a Sabbatical? Here’s What You Need to Know

Should You Take a Sabbatical? 3 Women Weigh In

How to Ask Your Boss for an Unpaid Leave to Travel, Study, or Spend Time with Family

Sabbaticals Help Fight Employee Burnout

SOURCE: Olson, B. (9 July 2019) "Sabbaticals Can Benefit Employees and Employers" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/sabbaticals-can-benefit-employees-and-employers


Top 10 Workplace Trends for 2019

The importance of looking forward three to six months or even a few years for new and emerging trends was discussed during this year's SHRM's Annual Conference & Exposition. Factors such as technological developments, economic changes, globalization and automation, all affect how companies do business and attract top talent. Read this blog post to learn more.


LAS VEGAS — HR professionals and organization leaders have a lot to keep up with: technological developments, economic changes, globalization and automation. All of these factors affect how companies do business and attract and retain talented workers.

"If we don't keep up with all the changes going on around us in terms of the tasks we do every day, we become obsolete," said Dan Schawbel, partner and research director at New York City-based Future Workplace, an executive development firm dedicated to rethinking and reimagining the workplace.

It's more important now than ever for business professionals to look forward three or six months or even a few years, he said during a mega session at the Society for Human Resource Management 2019 Annual Conference & Exposition.

Conference attendee Jessica Whitney said she hoped to learn about any new trends for the workplace so she could compare what's discussed to what her company is currently doing—to see what it's doing right and if there are any new ideas she can take back to the office. Whitney is a people partner at Unum Therapeutics in Massachusetts.

These are the top 10 trends that will impact HR departments in 2019, according to Schawbel's research.

1. Fostering the relationship between workers and robots.

One of the biggest trends of 2019 is the partnership between robots and humans. "The human element will never go away," Schawbel said. HR will continue to manage the human workforce, and information technology (IT) teams will manage the robots. "The big opportunity moving forward is for HR to partner with IT and even other departments … in order to collaborate and manage the human experience," he said.

2. Creating flexible work schedules.

"Flexibility is something that we want because we're working more hours than ever before," he said. Regardless of age or generation, employees want to have a life outside of work.

3. Taking a stand on social issues.

Younger workers, especially, want to work for companies that are making a positive difference in the world, Schawbel said. Companies that take a stand on social issues will be unpopular with some people, he noted, but if they want to attract the right talent, they have almost no choice.

4. Improving gender diversity.

Compared to men, few women hold executive positions. The New York Times reported that "fewer women run big companies than men named John." That's the bad news. "The great news," Schawbel said, "is that countries are getting involved, companies are getting involved, and it looks like changes are on the horizon."

5. Investing in mental health.

Many people either have mental disorders or interact with someone who does, and mental health is becoming less stigmatized as more people speak publicly on the topic. Britain's Prince Harry, for example, is partnering with Oprah Winfrey and Apple on a series about mental health and has also asked employers in the United Kingdom to sign a pledge to take a stand on this issue. Schawbel noted that employers who sign the pledge signal to employees that they take mental health seriously.

6. Addressing the loneliness of remote workers.

Many employees today can work from wherever they want. Remote work is great—and employers need to promote flexibility—but there is a cost, Schawbel said. The isolation employees feel when they don't interact enough with co-workers may cause them to check out. Investing in offsite and team-building events can help. Connecting with remote workers in person even once a year can make a huge difference and build trust, he noted.

7. Upskilling the workforce.

There are 7.4 million open jobs in the U.S., and the unemployment rate is 3.6 percent. So employers need to find creative ways to close the skills gap. Companies are starting to hire more older workers, workers with disabilities, workers who were formerly incarcerated and veterans. "The [talent] pool is getting wider and wider, which is great," Schawbel said. "It's great because talent can come from anywhere." Companies are less focused on age, gender and other factors and more concerned with whether the person can do the joband work well with others, he added.

8. Focusing on soft skills.

"Soft skills are the new hard skills," Schawbel said. Ninety-one percent of HR professionals surveyed by LinkedIn believe soft skills are very important for the future of recruiting. "You can train for hard skills, but soft skills take a long time to learn," Schawbel noted. "If you hire someone who has a positive attitude, good organizational skills, is able to delegate work … they're going to be incredibly valuable in today's world."

9. Preparing for Generation Z.

Employers need to understand Generation Z, the demographic born between the mid-1990s and mid-2000s. Many in this cohort identify anxiety as a major issue that gets in the way of their workplace success, which relates to addressing mental health, Schawbel said. And even though Generation Z workers self-identify as the digital generation, they say they want more face-to-face interaction at work. Additionally, they tend to expect quick promotions, so employers should set realistic expectations, he noted.

10. Preventing burnout.

Employees must grapple with an "always on" work culture, and many employees leave their companies as a result of being overworked. Employers should recognize what causes burnout and aim to fix it, because it may cost them more over time if they don't, Schawbel said.

"We have to think about work differently," he added. "The future is uncertain … but we can make changes today that will give us a better tomorrow."

SOURCE: Nagele-Piazza, L., J.D., SHRM-SCP (27 June 2019) "Top 10 Workplace Trends for 2019" (Web Blog Post). Retrieved from https://www.shrm.org/hr-today/news/hr-news/Pages/Top-10-Workplace-Trends-for-2019.aspx


Here’s how to ensure employees know how to pick the right benefits

Open enrollment is often a stressful time for employees, as well as an important one. Recent research shows that the average employee spends less than 30 minutes selecting their benefits. Continue reading for more on communicating benefit options to employees.


Annual enrollment is an important time for employees — but it’s also a stressful one. The choices they make can affect their financial health, yet the average employee spends less than 30 minutes selecting their benefits, according to research from benefits provider Unum.

With annual enrollment planning underway, now is the time for employers to ask themselves, “How can we help employees make the right benefits decisions?” The answers may be more valuable than they think.

See Also: Avoiding Communication Overload During Open Enrollment

Today’s workforce is the most diverse in history, with four generations actively working, and a fifth connected through benefits and pensions. A robust benefits package is increasingly important for recruitment and retention, challenging employers to provide choices and options that support diverse needs.

About 80% of employees prefer a job with benefits over one with a higher salary but no benefits, according to the American Institute of CPAs. As such it’s vital that employers ensure their workforce is engaged with their benefits and taking full advantage of what is available. Here are five ways employers can make sure that happens.

See Also: Incorporating Incentives to Create Educated Benefit Consumers

1. Acknowledge that decision support addresses personalized needs. Tools that demystify the benefits selection process can help employees make choices that align with their risk tolerance, financial circumstances and unique needs. The best tools lead employees to a recommended suite of benefits options that fit their individual physical, emotional and financial health.

2. Know that year-round engagement improves benefits literacy. While employees appreciate benefits, they aren’t experts. Indeed, roughly one-third of employees are outright confused about their benefits, according to recent data from Businessolver. Keeping up a cadence of communication about benefits throughout the year can help address this challenge.

3. Recognize the power of a total rewards statement. It empowers employees to maximize the benefits available to them, and these tools can be accessed at any time, not just during enrollment. The most impactful solutions aggregate all employee benefits options in one integrated offering that demonstrates the full value of compensation and benefits investments made by them and their employer.

See Also: Communicating the Value of Employee Benefits

4. Think about different generations. Customizable benefits options are a crucial step in meeting the needs of today’s workforce. For example, our latest data shows that nearly two-thirds of millennials are concerned with managing their monthly budget, while over 50% of boomers are most worried about a large, unexpected cost. Having core medical plan offerings along with complementary voluntary options helps employees address varying financial needs. Likewise, paid parental leave and different health plan options assist families at any stage, and they make it likelier that your employees will engage with their benefits and remain with your organization.

5. Be sure employees know that savings vehicles contribute to financial well-being. Employees of all ages and income levels are facing financial stressors — but they may not be the same ones. Offering different financial benefits, such as student loan assistance and emergency savings accounts, in addition to retirement benefits, enables your employees to address both their immediate and long-term financial needs.

See Also: Ideas for Effectively Demonstrating Plan Choices

More than ever, employers have a responsibility to help employees make informed decisions when it comes to selecting the right benefits. Otherwise, they risk losing top talent to organizations that are better implementing benefits strategies and technologies.

By meeting the needs of a diverse workforce with an array of benefits options supported by appropriate decision support resources, employers can ensure they’re meeting their workforce’s needs and retaining valuable employees.

See Also: Ideas to Help Employees Find their "Best Fit" Plan

SOURCE: Shanahan, R. (26 June 2019) "Here’s how to ensure employees know how to pick the right benefits" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/educating-employees-to-pick-the-right-benefits


Trucking Risk Advisor - July 2019

How Canada’s New ELD Rules Affect U.S. Companies

The Government of Canada announced its new electronic logging device (ELD) rule June 13, 2019. Canada’s rules and regulations regarding ELDs are largely similar to the United States’ standards, but there are a few differences that could affect U.S.-based companies that send their drivers north of the border.

Canada’s mandate includes a provision that ELDs are required to be certified by a third-party group. In other words, ELD vendors cannot certify their own products. According to industry experts, some devices introduced under U.S. standards have been shown to be prone to tampering, such as allowing drivers to falsify statistics like hours spent behind the wheel.

Requiring certification from a third-party will mean that U.S.-based companies whose drivers cross the border will need to have their devices approved in Canada. If a company’s ELD provider chooses not to go through the third-party certification process, the company will have to switch to a different manufacturer that is willing to do so.

Accommodating the new rules in Canada could be as simple as a software update to existing devices, although industry experts noted that some companies could start having to use two separate ELDs in the same vehicle in order to meet both U.S. and Canadian standards.

Canada’s mandate also includes a hard deadline. The United States adopted its ELD rules in 2017 but has allowed for a transition period during which companies can continue to use less advanced automatic onboard recording devices (AOBRDs) until December 2019. Canada’s rules demand fully compliant devices by the June 12, 2021, deadline.

To read the full mandate, click here. Hierl Insurance Inc. will provide any relevant updates as they are announced.

Newsletter Provided by: Hierl's Property & Casualty Experts

Download the Newsletter

Commercial Risk Advisor - July 2019

Lightning Safety for Outdoor Workers

Although about 90 percent of people struck by lightning survive, these strikes can cause serious and permanent disabilities. And, even if employees aren’t hurt by lightning, they may be at risk from any fires, explosions or other hazards that result from a strike. Together, these facts outline the importance of protecting employees who work outdoors from lightning hazards.

There are a number of ways to do this, including taking steps to reduce lightning hazards, creating an emergency action plan and training your workforce.

All of your managers, supervisors and outdoor workers should collaborate on your plan to ensure it accounts for your business’s unique operations.

Consider these tips when you’re drafting your plan:

  • Train all employees on lightning safety, including early warning systems for severe weather and the best locations to take shelter when working outdoors.
  • Post information on lightning safety around all of your outdoor work areas. These postings should indicate the location of safe shelters, when to stop and resume work after hearing thunder, and any other guidance that applies to your business or work sites.
  • Make sure employees check weather reports before working outside. Employees should also check the weather at each work site they’ll be visiting each day, as weather patterns can vary widely—even over short distances.
  • Require employees and supervisors to monitor weather reports regularly once they’re at an outdoor work site. Have employees stop work and seek shelter immediately if they hear any thunder.

For more resources to help keep your outdoor workers safe, contact Hierl Insurance Inc. today.

Direct costs of MSDs can be as high as $20 billion a year, with indirect costs (e.g. lost productivity and absenteeism) costing employers five times more.

The Importance of Ergonomics in the Workplace

Ergonomics is a catch-all term that often comes up in discussions about workplace health, safety and design—and for good reason. Employers who fail to implement ergonomic solutions at their place of business put their employees at risk of serious injuries.

When your employees perform tasks under the stress of an awkward posture, extreme temperature or repeated movement, their entire musculoskeletal system can be affected. This can lead to adverse symptoms like fatigue, discomfort and pain, which are the first signs of a musculoskeletal disorder (MSD).

MSDs are conditions that affect muscles, joints, tendons, ligaments and nerves. These conditions can develop over time or occur immediately when workers overload themselves. Direct costs of MSDs can be as high as $20 billion a year, with indirect costs (e.g., lost productivity and absenteeism) costing employers five times more.

Ensuring workstations and tasks are designed with ergonomics in mind does more than promote productivity. When employers invest in ergonomic workplaces, it:

  • Saves organizations money by reducing absenteeism, injuries and workers’ compensation claims
  • Creates happier employees, as workers feel valued when employers take steps to create a safe workplace
  • Contributes to employees’ long-term health and quality of life

While ergonomics can mean different things depending on the industry you operate in, the goal is the same: identify the ergonomics-related risks in your workplace and take steps to protect employees. This can be accomplished by establishing an ergonomics program.

An ergonomics program is systematic process for identifying, analyzing and controlling workplace risk factors, often created with the goal of reducing MSDs. In order to address ergonomics-related concerns, your program needs to identify the most common risk factors present in your workplace.

Although about 90 percent of people struck by lightning survive, these discharges can cause serious and permanent disabilities.

Download the Newsletter

A monthly safety newsletter from


Agriculture Risk Advisor - Third Quarter 2019

Pesticide Safety

Administering and working around pesticides is an important part of working in agriculture. However, while these products are very effective in protecting crops from pests, they can also cause health problems for those who are constantly exposed to them.

For example, results from a recent Michigan State University study found that workers exposed to high levels of pesticides are more likely to lose their sense of smell later in life. The study surveyed over 11,000 farm workers over a 20-year period as part of the Agricultural Health Study.

According to the study, 10% of workers reported that their sense of smell was impaired, either partially or completely, after being exposed to high levels of pesticides. However, those who washed with soap and water immediately after a high pesticide exposure event had a lower risk of impairment, with longer times between exposure and washing correlating to higher chances of impairment. This underscores the need for a quick response after an exposure event.

Other safety tips that should always be observed to protect from adverse health effects include the following:

  • Follow directions on the label for the attended use and application.
  • Note first-aid instructions in case of accidental poisoning.
  • Follow directions on the label for proper storage or disposal after use.
  • Do not smoke, eat, drink, apply cosmetics or use the washroom directly following the use of pesticides.
  • Do not use pesticides in winds stronger than 10 mph.

Additionally, wearing protective gear is one of the best lines of defense against exposure to chemicals. Long-sleeved shirts, long pants, nonabsorbent gloves, rubber boots, hats, eye protection, masks, aprons, face respirators and dust mist filters are all beneficial while applying pesticides. Clothing should also be checked beforehand for defects or holes that may allow pesticides to reach the wearer.

Newsletter Provided by: Hierl's Property & Casualty Experts

Download the Newsletter

The Occupational Phenomenon Called Employee Burnout

Workplace culture and work expectations at an organization often can foster employee burnout, defined as “Burn-out is a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed,” by the World Health Organization. Continue reading to learn more.


Employee burnout is fast becoming prevalent in many workplaces and is also a recurring theme in my day-to-day conversations with people. Unfortunately, many workplaces dismiss the subject and make it more of the employee’s issue than a workplace issue.

“Burn-out is a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed. It is characterized by three dimensions: 1) feelings of energy depletion or exhaustion; 2) increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job; and 3) reduced professional efficacy.”

— World Health Organization

An organization’s culture and the work expectations in those organizations can foster employee burnout. Below are examples of situations that make employees prone to burnout:

  • Digital Culture: A digital workplace, according to Deloitte, is one where many operational activities are performed over technology devices. These days, you can access your work emails, phone and video conferencing applications, instant messaging tools, and work documents through a single device. It is even more tempting to resist the notifications that continuously nudge you to respond to work-related matters. While I appreciate the digital workplace and understand that it is here to stay, it often implies that we need to be available around-the-clock, even during weekends. You have managers or coworkers sending work requests during early or late hours of the day, leading to a work-life imbalance for the employee. When work begins to encroach into an employee’s personal life, then they are at risk of burnout.
  • Excessive Meetings: Collaboration is a skill required in many workplaces, and there’s no doubt that it is essential. However, some organizations tend to go overboard with their expectations from employees. Study shows that the average employee spends approximately six hours in meetings per week, while senior managers spend about 23 hours in meetings per week, and this increases by the size of the organization. Meetings, whether in-person or virtual, provide excellent opportunities for collaboration. When meetings become excessive and leave employees with little to no time to decompress, this can cause stress for employees and eventually lead to burnout.
  • Dysfunctional Work Environments: In these work environments, employees face issues such as bullying, micromanagement, gossip, favoritism, or microaggression from coworkers or managers. A workplace that encourages such undermining behaviors can cause undue stress, which can eventually lead to burnout.
  • Overworking Top Performers: It is quite easy for managers to overwork the best-performing employees. While the managers have the assurance of quality work, such employees become the victims of burnout because it seems like the reward for top performance is more work. Worse still, burnout is likely to occur when these employees do not receive fair compensation for the work they do.

What are the Signs of Employee Burnout?

The following are some signs of burnout in your employees:

  • Reduced drive and work performance
  • Increased absences from work
  • Frequent tardiness
  • Mental health conditions like anxiety and depression
  • Poor concentration at work
  • Increased sick days
  • Visible frustration
  • Lack of trust in the company and its leaders

If you or your colleagues are exhibiting any of these signs, you might be burned out.

Some Data

  • A 2018 Gallup report states that “two-thirds of full-time workers experience burnout on the job.”
  • A Harvard Business School article reports that “the estimated cost of workplace stress is anywhere from $125 to $190 billion a year.”
  • An article by The World Economic Forum states that “the annual cost of burnout to the global economy has been estimated to be £255 billion.”
  • Research by Stanford Graduate School of Business states that “workplace stress—such as long hours, job insecurity and lack of work-life balance—contributes to at least 120,000 deaths each year and accounts for up to $190 billion in health care costs.”

The data shows that employee burnout is now a workplace epidemic. To prove the seriousness of this issue, the World Health Organization (WHO) recently classified burnout as an “occupational phenomenon” in its latest revision of the International Classification of Diseases (ICD-11).

Ways to Reduce Employee Burnout

  • Create and Maintain a Positive Work Environment: You can do this by being aware of your actions and how they impact those around you. Do not bully or micromanage your employees, or gossip about them to other employees you manage. When making decisions about your employees, be fair and consistent to avoid feelings of favoritism. Also, empower your employees to apply their skills by giving them autonomy. These help to increase satisfaction and create trust in the workplace.
  • Set Realistic Goals: Plan projects ahead of time with your employees, set realistic deadlines or meetings, and be mindful of their personal commitments when assigning projects with tight deadlines.
  • Show Support: Create communication channels for your employees to share their concerns or frustrations with you. Having an open-door policy or weekly check-in meetings where they can share their concerns with you can make your employees feel supported. Listen to them and help to address their issues.
  • Show Appreciation: Recognize your employees for their contributions to your team. Recognition makes your employees, especially your top performers, feel like their work is impactful. When employees feel appreciated, they are more likely and willing to do great work.
  • Promote Self-Care: Encourage your employees to practice self-care by permitting their requests for personal time off or vacation when they need it. You can also encourage them to fully unplug while they are out of the office by not sending urgent requests. Another way to promote self-care is to remove all expectations that employees need to be reachable around-the-clock. Also, do not encourage employees to stay long hours at work.

Originally published on Osasu Arigbe blog.

SOURCE: Arigbe, O. (13 June 2019) "The Occupational Phenomenon Called Employee Burnout" (Web Blog Post). Retrieved from https://blog.shrm.org/blog/the-occupational-phenomenon-called-employee-burnout


PCORI Fee Is Due by July 31 for Self-Insured Health Plans

Patient-Centered Outcomes Research Institute (PCORI) annual fees are due by July 31, 2019. Plans with terms ending after September 30, 2012, and before October 1, 2019, are required to pay an annual PCORI fee. Read this article from SHRM to learn more.


An earlier version of this article was posted on November 6, 2018

The next annual fee that sponsors of self-insured health plans must pay to fund the federal Patient-Centered Outcomes Research Institute (PCORI) is due July 31, 2019.

The Affordable Care Act mandated payment of an annual PCORI fee by plans with terms ending after Sept. 30, 2012, and before Oct. 1, 2019, to provide initial funding for the Washington, D.C.-based institute, which funds research on the comparative effectiveness of medical treatments. Self-insured plans pay the fee themselves, while insurance companies pay the fee for fully insured plans but may pass the cost along to employers through higher premiums.

The IRS treats the fee like an excise tax.

The PCORI fee is due by the July 31 following the last day of the plan year. The final PCORI payment for sponsors of 2018 calendar-year plans is due by July 31, 2019. The final PCORI fee for plan years ending from Jan. 1, 2019 to Sept. 30, 2019, will be due by July 31, 2020.

In Notice 2018-85, the IRS set the amount used to calculate the PCORI fee at $2.45 per person covered by plan years ending Oct. 1, 2018, through Sept. 30, 2019.

The chart below shows the fees to be paid in 2019, which are slightly higher than the fees owed in 2018. The per-enrollee amount depends on when the plan year ended, as in previous years.

Fee per Plan Enrollee for Payment Due
July 31, 2019
Plan years ending from Oct. 1, 2018, through Sept. 30, 2019. $2.45
Fee per Plan Enrollee for Payment Due
July 31, 2018
Plan years ending from Oct. 1, 2017, through Dec. 31, 2017, including calendar-year plans. $2.39
Plan years ending from Jan. 1, 2017, through Sept. 30, 2017 $2.26
Source: IRS.

Nearing the End

The PCORI fee will not be assessed for plan years ending after Sept. 30, 2019, "which means that for a calendar-year plan, the last year for assessment is the 2018 calendar year," wrote Richard Stover, a New York City-based principal at HR consultancy Buck Global, and Amy Dunn, a principal in Buck's Knowledge Resource Center.

For noncalendar-year plans that end between Jan. 1, 2019 and Sept. 30, 3019, however, there will be one last PCORI payment due by July 31, 2020.

"There will not be any PCORI fee for plan years that end on October 1, 2019 or later," according to 360 Corporate Benefit Advisors.

The PCORI fee was first assessed for plan years ending after Sept. 30, 2012. The fee for the first plan year was $1 per plan enrollee, which increased to $2 per enrollee in the second year and was then indexed in subsequent years based on the increase in national health expenditures.

FSAs and HRAs

In addition to self-insured medical plans, health flexible spending accounts (health FSAs) and health reimbursement arrangements (HRAs) that fail to qualify as “excepted benefits” would be required to pay the per-enrollee fee, wrote Gary Kushner, president and CEO of Kushner & Co., a benefits advisory firm based in Portage, Mich.

As set forth in the Department of Labor's Technical Release 2013-03:

  • health FSA is an excepted benefit if the employer does not contribute more than $500 a year to any employee accounts and also offers a group health plan with nonexcepted benefits.
  • An HRA is an excepted benefit if it only reimburses for limited-scope dental and vision expenses or long-term care coverage and is not integrated with a group health plan.

Kushner explained that:

  • If the employer sponsors a fully insured group health plan for which the insurance carrier is filing and paying the PCORI fee and the same employer sponsors an employer-funded health care FSA or an HRA not exempted from the fee, employers should only count the employees participating in the FSA or HRA, and not spouses or dependents, when paying the fee.
  • If the employer sponsors a self-funded group health plan, then the employer needs to file the form and pay the PCORI fee only on the number of individuals enrolled in the group health plan, and not in the employer-funded health care FSA or HRA.

An employer that sponsors a self-insured HRA along with a fully insured medical plan "must pay PCORI fees based on the number of employees (dependents are not included in this count) participating in the HRA, while the insurer pays the PCORI fee on the individuals (including dependents) covered under the insured plan," wrote Mark Holloway, senior vice president and director of compliance services at Lockton Companies, a benefits broker and services firm based in Kansas City, Mo. Where an employer maintains an HRA along with a self-funded medical plan and both have the same plan year, "the employer pays a single PCORI fee based on the number of covered lives in the self-funded medical plan (the HRA is disregarded)."

Paying PCORI Fees

Self-insured employers are responsible for submitting the fee and accompanying paperwork to the IRS, as "third-party reporting and payment of the fee is not permitted for self-funded plans," Holloway noted.

For the coming year, self-insured health plan sponsors should use Form 720 for the second calendar quarter to report and pay the PCORI fee by July 31, 2019.

"On p. 2 of Form 720, under Part II, the employer needs to designate the average number of covered lives under its applicable self-insured plan," Holloway explained. The number of covered lives will be multiplied by $2.45 for plan years ending on or after Oct. 1, 2018, to determine the total fee owed to the IRS next July.

To calculate "the average number of lives covered" or plan enrollees, employers should use one of three methods listed on pages 8 and 9 of the Instructions for Form 720. A white paper by Keller Benefit Services describes these methods in greater detail.

Although the fee is paid annually, employers should indicate on the Payment Voucher (720-V), located at the end of Form 720, that the tax period for the fee is the second quarter of the year. "Failure to properly designate 'second quarter' on the voucher will result in the IRS's software generating a tardy filing notice, with all the incumbent aggravation on the employer to correct the matter with the IRS," Holloway warned.

A few other points to keep in mind: "The U.S. Department of Labor believes the fee cannot be paid from plan assets," he said. In other words, for self-insured health plans, "the PCORI fee must be paid by the plan sponsor. It is not a permissible expense of a self-funded plan and cannot be paid in whole or part by participant contributions."

In addition, PCORI fees "should not be included in the plan's cost when computing the plan's COBRA premium," Holloway noted. But "the IRS has indicated the fee is, however, a tax-deductible business expense for employers with self-funded plans," he added, citing a May 2013 IRS memorandum.

SOURCE: Miller, S. (2 July 2019) "PCORI Fee Is Due by July 31 for Self-Insured Health Plans" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2019-pcori-fees.aspx