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Self-insured employers, take note

June 14, 2013


ACA-required fee affects all plan sponsors; the self-insured must file

One provision of the Affordable Care Act (ACA) of 2010 required the establishment of a not-for-profit organization called the Patient-Centered Outcomes Research Institute (PCORI). PCORI funding is legislated to come, in-part, from a fee on insurance issuers, including sponsors of self-insured plans. The imposed fee begins in 2012 and phases out in 2019.

The fee is being treated like an excise tax by the IRS, which will require insurance issuers, including sponsors of self-insured plans, to file Form 720 by July 31.

For sponsors of fully-insured plans, the issuer – your insurance company – is responsible for filing Form 720 and paying the required PCORI fee on your behalf. No filing action is needed on your part. However, it’s expected that your insurer will roll the PCORI fee into your premium.

Sponsors of self-insured plans, Clark Schaefer Hackett stands ready to prepare your necessary filing. Please feel welcome to discuss the issue with your CSH professional.

While the fee requirement was included in the legislation that passed in March, 2010, the IRS only recently published its direction on calculating that fee, in December, 2012.

Calculating the Fee

Your PCORI fee is equal to the average number of covered lives for the policy year, times the applicable dollar amount, as seen below.

•    For policy years ending on or after Oct. 1, 2012, and before Oct. 1, 2013 – the applicable dollar amount is $1.
•    For policy years ending on or after Oct. 1, 2013, and before Oct. 1, 2014 – the applicable dollar amount is $2.
•    For policy years ending in any fiscal year beginning on or after Oct. 1, 2014 – the applicable dollar amount is the prior fiscal year’s dollar amount plus an adjustment for medical inflation.

Importance of the institute you’re funding

The not-for-profit PCORI was established to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing comparative clinical effectiveness research.

Part of PCORI’s mission is to improve healthcare delivery and outcomes, by producing and promoting high integrity, evidence-based information that comes from research. This is aimed straight at the heart of healthcare costs. Ultimately, the institute is involved in advancing clinical effectiveness so that dollars aren’t wasted on decisions that result in poor outcomes. Theoretically, every health insurance plan sponsor will benefit.

The Affordable Care Act provides that the institute will not be an agency or establishment of the United States Government, and will be funded by a Patient-Centered Outcomes Research Trust Fund. The trust fund, in turn, is to be financed in part by the fees paid by issuers of health insurance policies and sponsors of self-insured health plans.

For more information contact Denice Hertlein at [email protected].

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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