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Plan Sponsors – Employers Must Pay PCORI Fees

May 25, 2016

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In 2013, the Affordable Care Act (ACA) established an excise tax to be paid by employers with  self-insured health plans. The plan sponsor is responsible for the reporting and payment of the fee, which is used to fund the Patient-Centered Outcomes Research Institute (PCORI), an initiative to improve health decisions by advancing comparative clinical effectiveness research. Employers that sponsor a self-insured health plan have until July 31, 2016, to submit an updated form (Form 720) and payment for the tax requirement.

How much do I owe?

The fee is determined based on your plan year ending. The fees are as follows:

Plan year ending in 2015 Fee per covered life
Plan years ending on or after Jan. 1, 2015,
through Sept. 30, 2015
$2.08
Plan years ending on or after Oct. 1, 2015
through Dec. 31, 2015, including calendar year plans
$2.17

Who is responsible for the fee?

Internal Revenue Code Section 4376 imposes a PCORI fee on self-insured health plans. Generally, this is any plan providing accident and health coverage other than through an insurance policy.

Below is a summary of plans for which the PCORI fee applies and those which are exempt:

Plans subject to the fee Plans exempt from the fee
  • Self-insured medical plans or medical reimbursement plans
  • Prescription drug plans
  • Self-insured dental or vision plans, if provided without a separate election or premium charge
  • Health reimbursement arrangements (HRAs)
  • Retiree-only health plans (even though some are exempt from other PPACA mandates)
  • Separately insured dental or vision plans
  • Self-insured dental or vision plans, if subject to separate coverage elections and employee contributions
  • Expatriate coverage provided primarily for employees who work and reside outside of the U.S.
  • Health savings accounts (HSAs)
  • Most flexible spending accounts (FSAs)
  • Employee assistance programs (EAPs), wellness programs, and disease management programs that do not provide “significant benefits in the nature of medical care or treatment”

How we can help

Do you know if your plan is subject to the fee? Do you need help filing Form 720? Contact Clark Schaefer Hackett’s Qualified Plan Administration and Consulting Group at 513-424-5000 for assistance with this requirement.

 

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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