How should a health plan determine what receipts to use to decide whether it qualifies as a 'small health plan'?

Question: How should a health plan determine what receipts to use to decide whether it qualifies as a 'small health plan'?

Answer : A small health plan is defined at 45 C.F.R.§ 160.103 as “a health plan with annual receipts of $5 million or less.” Health plans that report receipts to the IRS on identified tax forms. Health plans that file certain federal tax returns and report receipts on those returns should use the following guidance provided by the Small Business Administration at 13 C.F.R. § 121.104 to calculate annual receipts: Receipts means 'total income' (or in the case of a sole proprietorship, 'gross income') plus 'cost of goods sold' as these terms are defined or reported on Internal Revenue Service (IRS) Federal tax return forms; Form 1120 for corporations; Form 1120S for Subchapter S corporations; Form 1065 for partnerships; and Form 1040, Schedule F for farm or Schedule C for sole proprietorships). However, the term “receipts” excludes net capital gains or losses, taxes collected for and remitted to a taxing authority if included in gross or total income, proceeds from the transactions between a concern and its domestic or foreign affiliates (if also excluded from gross or total income on a consolidated return filed with the IRS), and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker.In calculating receipts under this guidance, health plans should use the definitions and process described at 13 C.F.R. § 121.104(a)(2) - (3) and § 121.104(b).•Health plans that do not report receipts to the IRS on identified tax forms.Interactive Agency

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•Health plans that do not report receipts to the IRS – for example, ERISA group health plans that are exempt from filing income tax returns – should use proxy measures to determine their annual receipts. Fully insured health plans should use the amount of total premiums which they paid for health insurance benefits during the plan’s last full fiscal year. Self-insured plans, both funded and unfunded, should use the total amount paid for health care claims by the employer, plan sponsor or benefit fund, as applicable to their circumstances, on behalf of the plan during the plan’s last full fiscal year. Those plans that provide health benefits through a mix of purchased insurance and self-insurance should combine the proxy measures to determine their total annual receipts.