Patient-Centered Outcomes Research Institute (PCORI) Fee / Comparative Effectiveness Fee:
Reminder: Plan Sponsors of Applicable Self-Funded Health Plans Must Make PCORI Fee Payment By July 31, 2017
Please let this serve as a reminder that the PCORI fee is due by July 31st and must be reported on Form 720. The fee is used to partially fund the Patient-Centered Outcomes Research Institute which was implemented as part of the Patient Protection and Affordable Care Act.
Instructions are found here (see Part II): http://www.irs.gov/pub/irs-pdf/i720.pdf
The Form 720 itself is found here (see Part II): http://www.irs.gov/pub/irs-pdf/f720.pdf
Form 720, as well as the attached Form 720-V to submit payment, must be used to report and pay the requisite PCORI fee to the IRS. While Form 720 is used for other purposes to report excise taxes on a quarterly basis, for purposes of this PCORI fee, it is only used annually and is due by July 31st of each relevant year.
As previously advised, plan sponsors of applicable self-funded health plans are liable for this fee imposed by Code Section 4376. Insurers of specified health insurance policies are also responsible for this fee.
- For plan years ending on or after October 1, 2016 and before October 1, 2017, the fee is $2.26 per covered life.
- For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39 per covered life.
See IRS Notice 2017-61. The fee is due no later than July 31st of the year following the last day of the plan year and concludes with plan years ending on or after October 1, 2018 and before October 1, 2019. For calendar year plans, the fee runs from 2012 through 2018 plan years. This means that 2018 will be the last year that the PCORI fee is assessed for a calendar year plan (and again, will be due July 31, 2019).
There are specific calculation methods used to configure the number of covered lives and special rules may apply depending on the type of plan being reported. While generally all covered lives are counted, that is not the case for all plans. For example, HRAs and health FSAs that are not excepted from reporting only must count the covered participants and not the spouses and dependents. The Form 720 instructions do not outline all of these rules.
If you have questions regarding the application of this fee to your plans, please feel free to contact us.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in 2017 she was selected as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly, and as the 2015 “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers. Contact her for more information on this reminder or other matters at 517.377.0826 or firstname.lastname@example.org.
Samantha A. Kopacz focuses her practice in employee health and welfare benefits. She represents employers, group health plans, insurance companies, and third party administrators in regulatory and compliance issues regarding ERISA, HIPAA, PPACA, COBRA, IRC, FMLA, and other benefit related federal and state laws. Contact her for more information on this reminder or other matters at 517.377.0868 or email@example.com.