June 21, 2019
The Affordable Care Act (ACA) contains several temporary annual fees and payments that apply to group health plans and insurers. One such fee, the annual Patient-Centered Outcomes Research Institute (PCORI) Fee is due by July 31, 2019. The PCORI Fee is imposed on plan sponsors of applicable self-insured health plans and issuers of specified health insurance policies. This means that employers who sponsor self-funded plans are responsible for paying this fee, as are insurers of most fully insured policies.
PCORI is intended to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The research is to be funded, in part, by fees paid by health insurance issuers (including HMOs) and sponsors of self-insured health plans. The PCORI Fee first became effective beginning with plan years ending on or after October 1, 2012 (Generally for plan years beginning November 1, 2011 and ending October 31, 2012), and will be assessed annually for seven years. The research fees do not apply for plan years ending on or after October 1, 2019. Thus, for plan years ending on or after October 1, 2018 and before January 1, 2019 (which would include all plans with calendar year plan years), this will be the last PCORI Fee payment due.
The PCORI Fee is considered an excise tax that must be reported on Internal Revenue Service (IRS) Form 720 for the second quarter reporting period. It is due by July 31 of the year following the last day of the plan year being reported on. Payment is to be remitted along with the Form 720 filing and the amount will vary depending on the plan year. PCORI Fee payments were first due July 31, 2013 for plan years ending on or after October 1, 2012 and before January 1, 2013.
The PCORI Fee is not assessed against most healthcare flexible spending accounts (unless they do not meet the requirements for being an excepted benefit under the ACA), as well as employee assistance, disease management, and wellness programs not providing significant medical care benefits, and plans covering primarily employees working outside the United States. A plan sponsor is also able to treat multiple self-insured plans with the same plan year as a single plan for reporting and payment purposes. For example, a plan sponsor with a self-insured plan providing major medical benefits and a separate self-insured plan with the same plan year that provides prescription drug coverage may be considered as a single plan so that the same covered life under each plan is counted only once. Note however, plan sponsors that have established a health reimbursement account (HRA) integrated with their fully-insured medical plan may be subject to a separate PCORI Fee assessment for that HRA.
The following table depicts the fee amount payable by the July 31, 2019 filing and payment deadline:
|Plan Year Ending||Fee Amount|
|January 31, 2018||$2.39 per average number of covered lives|
|February 28, 2018||$2.39 per average number of covered lives|
|March 31, 2018||$2.39 per average number of covered lives|
|April 30, 2018||$2.39 per average number of covered lives|
|May 31, 2018||$2.39 per average number of covered lives|
|June 30, 2018||$2.39 per average number of covered lives|
|July 31, 2018||$2.39 per average number of covered lives|
|August 31, 2018||$2.39 per average number of covered lives|
|September 30, 2018||$2.39 per average number of covered lives|
|October 31, 2018||$2.45 per average number of covered lives|
|November 30, 2018||$2.45 per average number of covered lives|
|December 31, 2018 (calendar year plans)||$2.45 per average number of covered lives|
Plan sponsors of self-insured plans may use one of three methodologies for determining the average number of covered lives under the plan for the plan year:
For More Information
For further information, including links to the final PCORI regulations, questions and answers regarding the PCORI Fee, a chart depicting the types of insurance coverage subject to the fee, and the Form 720, along with instructions, please visit the IRS website here.
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:Burnham Benefits
Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.