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April 26, 2016
Employers who sponsor self-funded medical plans must report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fees no later than July 31, 2016. Health insurance carriers will pay the fee directly in the case of fully-insured plans.
PCORI fees apply to plan years ending after Sept 30, 2012 and before Oct 1, 2019. 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.
The PCORI fee generally applies to all group health plans, but not to excepted benefits. The IRS published a chart that describes the different types of plans subject to the fee, which can be found here.
Amount of Fee
Payment amounts due in 2016 differ based on the employer’s plan year. The IRS has put together a chart showing applicable fee amounts depending on the plan year end date here.
For future years, the annual fee will be increased based on the percentage increase in the projected per capita amount of National Health Expenditures (as published by the IRS).
Calculating the Average Covered Lives
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.
(a) Count the actual lives covered on the designated date; or
(b) Count the participants with self-only coverage on the designated date, plus the participants with coverage other than self-only coverage on the designated date multiplied by 2.35.
Special rules for counting covered lives:
Multiple Self-Funded Plans
If one plan sponsor maintains more than one self-funded health plan with the same plan year, the arrangements can be treated as a single plan for purposes of the fee.
Health Reimbursement Accounts (HRAs)
An employer who sponsors an HRA integrated with a fully-insured medical plan is required to pay the fee with respect to each HRA participant/employee (employers are not required to count dependents or beneficiaries).
As always, should you have any questions, please contact your Parker, Smith & Feek Benefits Team. 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.
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.