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PCORI Fees Due for Many Health Insurance Arrangements by July 31, 2017

PCORI fee

Under the Patient Protection and Affordable Care Act (PPACA), certain types of health insurance arrangements are required to pay a special fee. This fee is called the Comparative Effectiveness Research Fee, also referred to as the PCORI fee, and it will be used to help fund the Patient-Centered Outcomes Research Institute. The types of arrangements subject to this fee include:

  • Fully insured medical plans
  • Self-insured medical plans
  • Employer plans sponsored by private, government, churches, and not-for-profit organizations
  • Individuals on a temporary U.S. visa who reside in the U.S.
  • Retiree only plans
  • Health Reimbursement Accounts (HRAs)
  • Certain Flexible Spending Accounts (FSAs), if the employer contribution is greater than $500 and is more than the employee contribution

The PCORI fee is reported and remitted to the IRS through Form 720. The 2016 fees are detailed below:

The PCORI fee is based on the average number of covered lives during the plan year. Covered lives include covered employees of the plan sponsor and all other covered dependents. The IRS has prescribed four methods for counting average number of employees.

In fully insured arrangements, insurance companies are required to pay the fee and file Form 720. Self-insured plan sponsors are also required to both pay the fee and submit Form 720. Unlike other aspects of the Act, the PCORI fee requirement is applicable to all affected plans regardless of the employer’s size. Furthermore, the Department of Labor has indicated that the fee must be paid by the employer and not from plan assets.

Contact Mark Flanagan, Director of Aronson’s Compensation and Benefits Practice, at 301-231-6257 or mflanagan@aronsonllc.com to further discuss the impact this requirement.

PCORI Fee Due for Many Health Insurance Arrangements by July 31, 2015

Under the Patient Protection and Affordable Care Act “PPACA,” certain types of health insurance arrangements are required to pay the Comparative Effectiveness Research Fee, which is also known as the PCORI fee because the monies are used to help fund the Patient-Centered Outcomes Research Institute. The types of arrangements subject to the fee are:

  • Fully insured medical plans
  • Self-insured medical plans
  • Health Reimbursement Accounts (HRAs)
  • Plans sponsored by private, government, nonprofit and church employers
  • Individuals on a temporary US visa who reside in the US
  • Retiree-only plans
  • Certain Flexible Spending Accounts (FSAs), if the employer contribution is greater than $500 and it is more than the employee contribution

The fee is reported and remitted to the IRS via Form 720 and is due by July 31st of the year following the last day of the plan year.

The fee is based on the average number of covered lives during the plan year. Covered lives include the covered employees of the plan sponsor and all other covered dependents. The IRS has prescribed various methods for determining the average number of lives.

The amount of the fee is $2 per covered life for policy years ending on or after Oct. 1, 2013, and before Oct. 1, 2014; and $2.08 per covered life for plan years beginning on or after Oct. 1, 2014 and ending before Oct. 1, 2015.

In fully insured arrangements, the insurance companies are required to pay the fee and submit Form 720. Self-insured plan sponsors are required to both pay the fee and submit Form 720. Unlike other aspects of the Act, the PCORI fee requirement is applicable to all affected plans, regardless of employer size.

Please contact Mark Flanagan of Aronson’s compensation and benefits practice at 301.231.6257 to further discuss the payment of these fees and the filing of Form 720.

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