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June 3, 2019
Employers who sponsored self-funded medical plans ending sometime during 2018 must report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fees no later than July 31, 2019. PCORI fees apply to plan years ending after Sept 30, 2012 and before Oct 1, 2019 (including short plan years), so for plan years ending in October, November or December, this is the last year of PCORI fees.
The PCORI fee applies to most group health plans, but not to excepted benefits. The IRS published a chart that describes the different types of plans subject to the fee here – https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangements.
General summary information regarding PCORI fees can be found at https://www.irs.gov/newsroom/patient-centered-outcomes-research-institute-fee.
The fee is paid using quarterly excise tax Form 720 and must be paid no later than July 31 of the year following the last day of the plan year. If any corrections need to be made for prior years, use Form 720X.
Health insurance carriers pay the fee directly in the case of fully-insured plans, so employers offering only fully-insured group health plans do not have to do anything. However, employers are responsible for reporting and paying the fee for any self-funded group health plans, including Health Reimbursement Arrangements (HRAs).
Payment amounts due in 2019 differ based on the employer’s plan year. The IRS put together a chart showing applicable fee amounts depending on the plan year end date at https://www.irs.gov/affordable-care-act/patient-centered-outreach-research-institute-filing-due-dates-and-applicable-rates.
Self-funded plans may use one of three methods to determine the average covered lives. Plan sponsors must stick with one method for the entire plan year, but are allowed to change from year to year.
Special rules for counting covered lives:
As always, should you have any questions, please contact your Parker, Smith & Feek Benefits Team. For additional employee benefit compliance news and information visit our Healthcare Reform Explained website.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.