Affordable Care Act Update: Little Known Filing Requirement Due July 31

Posted on 07.25.13

Author: John T. Murray, CPA | Keiter Tax Manager

The Patient-Centered Outcomes Research Institute (PCORI) fee, though mostly applicable to health insurance issuers, can affect businesses that self-insure or have certain health reimbursement plans.

Though assessable payments have been pushed back to 2015, there are still fees from the Affordable Care Act (ACA) that are coming up soon.  A new tax for health insurance issuers and sponsors benefiting PCORI is now in effect as part of the ACA.  Fees (reported on the excise tax forms) benefiting PCORI will help the organization improve comparative clinical effectiveness research, allowing patients, purchasers, clinicians, and policy-makers to be more informed about their health choices. 

When does this fee take effect?  
The fee is required for all plan years starting between October 1, 2012 and September 30, 2019.  This requires the filing of IRS Form 720 (Part II, Section 133) by July 31 of the year following the end of the plan year. 

How will this affect me as an employer?  
Employers will be required to pay a fee ($1/avg. covered life) based on the amount of people they cover using Health Reimbursement Arrangements (HRAs), Flexible Spending Arrangements (FSAs), and/or self-insured policies. 

How much do I pay per life covered? 
For plan years beginning on or before September 30, 2013 the fee is $1 per life covered.  For plan years  starting on or after October 1, 2013 to September 30, 2014 (inclusive), the fee will be $2 per life covered.  After September 30, 2014, the fee is indexed to inflation. 

While the issuer of the policy or the plan sponsor is liable for and must pay the fee, typically businesses who offer specified health insurance policy or self-insured health plans use plan administrators.  Keiter recommends that businesses contact their plan administrators or human resource personnel to determine if PCORI applies.  Contact your Keiter professional with any questions on how this filing may impact your specific situation.