Employer Filing Requirement Reminder – 7/31/2014 Form 720 / PCORI Fee

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BACKGROUND:
The Patient Protection and Affordable Care Act of 2010 (ACA) created the Patient-Centered Outcomes Research Institute (PCORI) to help improve the information available to health care decision makers. The ACA also provides a structure to financially support The PCORI, whereby a small fee is imposed on a “per-covered-life” basis.

FILING & PAYMENT REQUIREMENT(S):
For employers who purchase fully ensured health insurance plans, all filing and payment requirements should be fulfilled by the insurer. Interested employers should contact their insurance provider(s) to confirm all PCORI filing and payment requirements will be fulfilled by their insurance carrier.

For employers with “applicable self-insured health plans”, the filing and payment responsibilities fall on the employer. Examples of applicable self-insured health plans for the purpose of determining PCORI fee requirements include self-funded medical insurance plans, self-funded prescription plans and Health Reimbursement Plans (HRAs). Note: Most Health Flexible Spending Arrangements (FSAs) are not applicable self-insured plans because they are excepted under the Internal Revenue Code (IRC).

It is possible for an employer to have both fully funded and applicable self-insured health plans. An example may be a situation where an employer has a fully insured medical insurance plan, but self-insures prescription coverage. In this case, the insurance carrier should fulfill the filing and payment obligations on lives covered by the fully insured plan, and the employer would have a filing requirement for the self-insured plan.

Employers with applicable self-insured plans will need to file IRS Form 720 by July 31, 2014 and remit payment of a small fee. The fees per covered life depend on the applicable self-insured health plan’s year end, as follows:
• For plan years ending between 1/1/2013 and 9/30/2013 the fee is $1 per covered life.
• For plan years ending between 10/1/2013 and 12/31/2013 the fee is $2 per covered life.

For many applicable self-insured health plans, the above fee is due on each covered life (including employees’ dependents). However, for HRAs the fee is due only on the employee covered by the plan. Employers should coordinate with their Third Party Administrator (TPA) to determine the number of covered lives for the purposes of filing IRS Form 720.

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