Note: Applies to both grandfathered and non-grandfathered plans.

The ACA requires plans to pay a Patient-Centered Outcomes Research Institute (PCORI) fee for plan years ending in 2012 and continuing through 2019.

The Patient-Centered Outcomes Research Institute (PCORI) fee helps fund research that evaluates and compares health outcomes, clinical effectiveness, and the risks and benefits of medical treatments and services.

The fees are temporary and are assessed for each covered member under a health plan.

Applicability

Fully-insured group health plans, self-funded group health plans, and accident plans are all subject to the fees, as well as individual fully-insured policies. Excepted benefits are not subject to this fee.

Health Reimbursement Arrangements (HRA) are also subject to this fee but special provisions may apply.

  • If a HRA is integrated with another self-funded plan that provides major medical coverage, and the HRA and the major medical plan have the same plan sponsor, the HRA is not subject to a separate fee. Whether or not the HRA and the major medical plan are consolidated into one plan document appears to be irrelevant.
  • HRAs that are integrated with insured group health plans are given different treatment. An HRA that is integrated with an insured group health plan is subject to a fee, as well as the insurer of the group health plan, even though the HRA and the insured group health plan are maintained by the same plan sponsor.

Health flexible spending accounts (FSAs) that satisfy the definition of “excepted benefits” under ERISA are not subject to the fees. Most FSAs satisfy the definition of “excepted benefits.”

Health Savings Accounts and Archer MSAs are generally neither health insurance policies nor self-funded plans and thus are not subject to these new taxes.

Due Date/Fee Amount

The fees apply to plan years ending on or after October 1, 2012 and before October 1, 2019; however, the payment of the fees and the informational reporting that must accompany the fee are not due until the first July 31 of the calendar year immediately following the last day of the plan year.  The fee is equal to the average number of covered lives for the plan year times the applicable dollar amount outlined below. Each year this amount is adjusted for medical inflation.

Renewal Date

Fee

Due Date

Feb 1, 2014 – Jan 31, 2015$2.08July 1, 2016
Mar 1, 2014 – Feb 28, 2015$2.08July 1, 2016
April 1, 2014 – March 31, 2015$2.08July 1, 2016
May 1, 2014 – April 30, 2015$2.08July 1, 2016
June 1, 2014 – May 31, 2015$2.08July 1, 2016
July 1, 2014 – June 30, 2015$2.08July 1, 2016
Aug 1, 2014 – July 31, 2015$2.08July 1, 2016
Sept 1, 2014 – Aug 31, 2015$2.08July 1, 2016
Oct 1, 2014 – Sept 30, 2015$2.08July 1, 2016
Nov 1, 2014 – Oct 31, 2015$2.17July 1, 2016
Dec 1, 2014 – Nov 30, 2015$2.17July 1, 2016
Jan 1, 2015 – Dec 31, 2015$2.17July 1, 2016
Feb 1, 2015 – Jan 31, 2016$2.17July 1, 2017
Mar 1, 2015 – Feb 28, 2016$2.17July 1, 2017
April 1, 2015 – March 31, 2016$2.17July 1, 2017
May 1, 2015 – April 30, 2016$2.17July 1, 2017
June 1, 2015 – May 31, 2016$2.17July 1, 2017
July 1, 2015 – June 30, 2016$2.17July 1, 2017
Aug 1, 2015 – July 31, 2016$2.17July 1, 2017
Sept 1, 2015 – Aug 31, 2016$2.17July 1, 2017
Oct 1, 2015 – Sept 30, 2016$2.17July 1, 2017
Nov 1, 2015 – Oct 31, 2016TBDJuly 1, 2017
Dec 1, 2015 – Nov 30, 2016TBDJuly 1, 2017
Jan 1, 2016 – Dec 31, 2016TBDJuly 1, 2017

Responsible Party

For a self-funded plan, the plan sponsor (not the TPA) is the party responsible for the payment of the fee. For multiemployer plans, the joint board of trustees is the plan sponsor. For a MEWA, the committee is the plan sponsor. The regulations state that in the case of a plan established or maintained by a single employer, the plan sponsor is the employer. For a fully-insured plan, the insurer is responsible for paying the fee. Stop-loss policies are not subject to the fee.

Reporting

This fee is reported on IRS Form 720. The Form 720, “Quarterly Federal Excise Tax Return,” has been amended by the IRS to allow for the reporting of this fee. Even though this Form is a quarterly excise tax form, Plan sponsors will only need to report this fee once a year. A plan sponsor that files a Form 720 only to report liability for these fees is not required to file Form 720 at other times during a year.

Calculation of Fee

For self-funded plans, the fee imposed on a plan sponsor is based on the average number of lives (participants and dependents) covered under the plan. The proposed regulations offer a choice of methods to determine the average number of lives.

Actual Count Method. The Actual Count Method requires a contributing entity to add the total number of lives (enrollees) covered for each day of the plan year and divide that total by the number of days in those twelve months.

Snapshot Method. The Snapshot Count Method requires a contributing entity to add the total number of covered lives of enrollees on any date during the same corresponding month in each quarter of the benefit year, and divide that total by the number of dates on which a count was made. The date(s) used for the second, third and fourth quarters must fall within the same week of the quarter as the corresponding date(s) used for the first quarter.

Snapshot Factor Method. The Snapshot Factor Method requires a contributing entity to add the total number of covered lives on any date during the same corresponding month in each quarter of the benefit year, and dividing that total by the number of dates on which a count was made. The date(s) used for the second, third and fourth quarters must fall within the same week of the quarter as the corresponding date(s) used for the first quarter.

This method varies from the original Snapshot Method because the number of lives covered on a date is calculated by adding: (1) the number of participants with self-only coverage on that date; and (2) the product of the number of participants with coverage other than self-only coverage on the date and a factor 2.35.

Form 5500 Method. Under the Form 5500 Method, the number of covered lives for the most current plan year is calculated based upon the “Annual Return/Report of Employee Benefit Plan” filed with the Department of Labor (Form 5500) for the last applicable time period.

For purposes of this counting method, the number of lives covered for the plan year for a plan offering only self-only coverage equals the sum of the total participants covered at the beginning and end of the plan year, as reported on lines 5 and 6(a)-(c) of Form 5500, divided by 2. The number of lives covered for the plan year for a plan offering self-only coverage and other than self-only coverage equals the sum of the total participants covered at the beginning and the end of the plan year, as reported on lines 5 and 6(a)- (c) of the Form 5500. (Can only be used by self-funded plans that have filed a Form 5500 for the prior plan year.)

Note: If RCI administers your group health plan, we can provide you (at your request) with the average number of covered lives that were on your plan for the applicable plan year using the Actual Count Method, Snapshot Method and Snapshot Factor Method.

Additionally, RCI cannot submit this fee on behalf of our clients but can assist with the required information and any questions.