With Affordable Care Act forms recently due and subsidy notifications on their way, companies may have thought their responsibilities regarding the regulations were complete. That's not the case, however, as a new – but minimal – fee has been imposed on specific healthcare policies and plan sponsors. The Patient-Centered Outcomes Research Institute Fee (PCORI) is due by July 31. Here's what businesses need to know:
What is the PCORI fee?
The goal of this new expense for companies is to help fund the PCORI, which investigates the effectiveness of various medical treatments in an effort to determine what therapies Medicare will cover in the future.
The fee applies to policy years ending on or after Oct.1, 2012 and before Oct.1, 2019 for those issuers of certain health insurance policies or plan sponsors of applicable self-insured health plans, according to the IRS. Common types of coverage or arrangements subject to the fee include the following:
- COBRA coverage.
- Some flexible spending arrangements (FSAs).
- Retiree-only health or major medical coverage.
- Accident and health coverage or major medical insurance coverage.
- Health or major medical coverage under multiple policies or plans.
- Some health reimbursement arrangements (HRAs).
- State and local government health or major medical plans for employees and/or retirees.
When should individuals file?
To be compliant with this new fee, issuers and sponsors need to file on a second quarter, yearly basis using form 720. Although this document is often utilized for a quarterly return, for this purpose, it is submitted annually only for companies not required report any other liabilities during the documentation on that form.
The fee must be paid by its due date – July 31 of the calendar year immediately following the last day of the policy or plan year to which the fee applies.
"Companies can use multiple methods to determine their rate for the PCORI fee."
How much is paid?
The PCORI fee is based on the average number of people covered under the specific policy or plan qualified for the extra cost.
Plan sponsors of applicable self-insured health plans ending before Oct. 1, 2013 are required to pay $1 multiplied by the median amount of people under that policy for that specific year. To determine the amount of lives under the plan for a given year, individuals can use the actual count method, snapshot method or form 5500 method, according to the IRS.
The IRS offers similar advice for specified health insurance policies ending before Oct. 1, 2013. Issuers of these options also have to pay $1 multiplied by the amount of people covered under the plan for that specific year. The tactics these parties can utilize to determine their fees include the actual count method, snapshot method, member months method and the state form method.
To determine the rate of payment for other plans and policies, organizations should consult this chart, according to the IRS.
It's important for employers to know that if the PCORI fee is paid through the Electronic Federal Tax Payment System, it should be designated for the second quarter specifically.
The obligations companies must follow and manage are never-ending and always subject to change. One of the newest is the PCORI fee, a small but important cost for plan issuers and sponsors to be mindful of. Triton Benefits is your source for the newest information regarding local, state and federal regulations and how to comply with them. Triton offers businesses the consultation services they need to never miss a deadline or pay a non-adherence penalty.