As part of the Affordable Care Act (ACA), one of the many excise taxes imposed by this act is again quickly approaching. The Patient-Centered Outcomes Research Institute (PCORI) fee is an excise tax imposed on health insurance issuers and plan sponsors of self-insured health plans effective for plan years ending on or after Oct. 1, 2012. The fee is calculated at $2.17 per covered life for plan years ending after Oct. 1, 2015 but before Oct.1, 2016 and increases to $2.26 per covered life for those plan years ending on or after Oct. 1, 2016 and before Oct. 1, 2017. This fee is due by July 31 each year with increases corresponding to the medical inflation rate all the way through the 2019 plan year.
While there is still much discussion in Washington surrounding the ultimate fate of the ACA, it is still law and employers are required to comply. Those employers with self-insured health plans will need to pay and report this fee with their second quarter excise tax filing on Form 720 which is due July 31, 2017. Employers who sponsor a self-fund prescription plan or HRA type plan, will also fall into this reporting requirement. The IRS has specifically stated that for these self-insured health plans, third party administrators will not be allowed to collect these fees or file the required Form 720. These PCORI fees must be paid and reported no later than July 31 of the year following the last day of the policy or plan year.
If you currently file Form 720, you will add this fee to your second quarter report. If you have never filed Form 720 before, there may be some additional registration needed to file and remit the fee. The IRS has issued some guidance to aid in the method for calculating "covered lives" and often times your plan administrator may have provided you with some details for this calculation.
For assistance with Form 720 contact your local UHY LLP professional.