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07.18.2013 Sponsors of Self-Insured Health Plans Must Pay the PCORI Fee by July 31

BY: BRYDON M. DEWITT

Sponsors of self-insured health plans and health insurers must pay the Patient-Centered Outcomes Research Fee by July 31, 2013 for plan years ending on or after October 1, 2012.  The Affordable Care Act established the Patient-Centered Outcomes Research Institute (the PCORI) to evaluate the effectiveness of medical treatments and procedures.  The PCORI is funded by the Patient-Centered Outcomes Research Fee (the PCORI Fee).

Sponsors of “applicable self-insured plans” and issuers of “specified health insurance policies” are required to pay the fee by filing IRS Form 720 by July 31, 2013.  The IRS Form 720 instructions may be found here.  IRS Form 720 is available here.

For purposes of the PCORI Fee, a self-insured employer-sponsored health plan is subject to the fee if it provides “accident or health coverage” and any portion of plan benefits is paid other than through an insurance policy.  Disability and long term care benefit plans are not subject to the fee.  Health flexible spending arrangements (FSAs) are not subject to the fee if (i) other group health plan coverage is offered to employees; and (ii) the maximum amount payable under the FSA does not exceed two times the employee’s salary reduction contributions. 

The PCORI fee is equal to $1.00 multiplied by the average number of covered lives under the plan for the plan year that ended on or after October 1, 2012.  The average number of covered lives may be determined under an actual count method, one of two snapshot methods, or a method using the number of participants reported on Form 5500.

Please contact any member of the Williams Mullen Employee Benefits Group if you have any questions about the PCORI Fee.