If your organization is self-insured and/or has a Health Reimbursement Account (HRA) plan or non-excepted Flexible Spending Account (FSA) plan, you are required to pay the new Patient Centered Outcomes Research Institute (PCORI) fee directly to the IRS.  This applies to any plan year ending after September 30, 2012 and before October 1, 2019.

     This PCORI fee will need to be paid by July 31 of each year.  It is reported with the filing of Form 720.

What is PCORI?

     The Patient Protection and Affordable Care Act imposes a new Patient-Centered Outcomes Research Institute (PCORI) fee on plan sponsors and issuers of individual and group policies.  For the first year the fee is $1 per average covered life per year; the second year the fee adjusts to $2 per average covered life; and then it will be further adjusted to reflect inflation in National Health Expenditures until it ends in 2019.

Plan end date
10/1/2012 through 9/30/2013
10/1/2013 through 9/30/2014
10/1/2014 through 9/30/2019
PCORI Fee per covered employee
$1
$2
Yet to be determined
Who pays the PCORI fee?

     The insurance carrier is responsible for paying the fee for fully-insured coverage.

     Self-funded plans (including HRAs) must report and pay directly to the IRS.  Also, employers that have fully-insured coverage with an HRA or non-excepted FSA must report and pay the PCORI fee for their HRA or FSA directly to the IRS for any employees participating in the offered HRA or FSA.

How to Calculate the PCORI fee:

     Employers may determine the average number of covered lives by using any of the following methods, but they must use the same method consistently for the duration of any year:

Actual Count: Count the total covered lives for each day of the plan year and divide by the number of days in the plan year.

Snapshot Dates:   Count the total number of covered lives on a single day in a quarter (or more than one day) and divide the total by the number of dates on which a count was made.  (The date or dates must be consistent for each quarter.)

Form 5500 Method:  Determine the average number of participants by combining the total number of participants at the beginning of the plan year with the total number of participants at the end of the plan year as reported on the Form 5500 and divide by 2.

Special counting rule for HRAs and FSAs:

     Plan sponsors are permitted to assume one covered life for each employee with an HRA or FSA.

The PCORI Fee generally applies to HRAs and FSAs in the following ways:
HRA integrated with self-funded medical plan

HRA integrated with fully insured medical plan

Stand-alone HRA limited in scope to dental and vision only

Other stand-alone HRA including retiree HRA

FSA limited in scope to dental and vision only

FSA with no employer contributions

FSA with employer contributions limited: lessor of employee contribution or $500

FSA with higher employer contributions than shown above

Health Savings Account (HSA)

The HRA and the plan are treated as one plan so no separate fee for HRA

PCORI Fee applies to the HRA and is payable by the employer.

No PCORI Fee applies


PCORI Fee applies and is payable by the employer

No PCORI Fee applies


No PCORI Fee applies

No PCORI Fee applies


PCORI Fee applies and is payable by the employer

Not a group health plan; no PCORI Fee applies

Form 720 Quarterly Federal Excise Tax Return and instructions can be obtained at www.irs.gov.  

For more information and help filing this form and any other compliance and tax issue, call The Rodeheaver Group at 301-334-3127.



 


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