|July 21, 2014|
The ACA imposed a new fee, the Patient Centered Outcome Research Institute (PCORI) fee on health insurers for insured plans and plan sponsors for self-insured plans. These fees will help pay for research to evaluate and compare the effectiveness and risks of different medical treatments, services and drugs.
WHAT IS THE AMOUNT OF THE PCORI FEES?
For any plan year that ended in 2013, the PCORI fee is due by July 31, 2014. For plan years ending between January 1, 2013 and September 30, 2013, the fee is $1 multiplied by the average number of covered lives (including spouses, dependents and those receiving COBRA coverage) under the plan. For plan years ending between October 1, 2013 and December 31, 2013, the fee is $2 times the average number of covered lives. Thus, for a 2013 calendar year plan, the fee would be $2 times the average number of covered lives under the plan in 2013.
WHICH PLANS ARE COVERED?
PCORI fees are imposed on group health plans including Health Reimbursement Accounts but excluding stand-alone dental and vision plans and virtually all flexible spending account plans. An HRA that covers only dental and vision benefits is considered an "excepted" benefit and is not subject to PCORI fees. If a plan sponsor maintains more than one self-insured arrangement, the arrangements may be treated as a single plan if the arrangements have the same plan year for purposes of determining the PCORI fee. A retiree-only plan (even if it is an "excepted" benefit) is subject to PCORI fees. Although PCORI fees are generally based on the number of covered individuals, HRAs are permitted to assume that there is only one covered individual for each employee with an HRA. Employee assistance and wellness programs are not subject to PCORI fees unless they provide significant medical care or treatment.
HOW DO PLAN SPONSORS AND INSURERS PAY PCORI FEES?
Plan sponsors and insurers should use IRS Form 720, Quarterly Federal Excise Tax Return, to report and pay PCORI fees. Although Form 720 is a quarterly filing, if there are no other excise taxes due, Form 720 is only required to be filed once a year. If there are other liabilities due for the second quarter of 2014, such liabilities and the PCORI fees should be filed on the same form. Form 720 may be filed electronically or manually.