The Affordable Care Act (ACA) established the Patient-Centered Outcome Research Institute (PCORI) to evaluate and compare health outcomes and the clinical effectiveness, risks and benefits of a variety of services that treat, manage, diagnose or prevent illness or injury. The work of this Institute is partially funded by a fee on health insurers, self-insured group health plans, most HRAs, and some FSAs. Employers with a self-funded medical plan, an HRA or a stand-alone FSA are responsible for paying this fee directly. PCORI fees are due by July 31, 2014, for plan years ending 2013. However, the rate per member will vary depending on whether the plan year ended before or after September 30, 2013. This overview explains who is responsible and how the fee is paid. Work with your benefits or tax consultant to determine if your organization should pay the fee and whether your company is responsible $1 or $2 per member for your 2013 plan year.
|PCORI FEE OVERVIEW|
|WHAT||Annual fee on fully insured and self-insured health plans|
|WHO PAYS||Fully insured medical – health plan pays; fee is built into the rates.
Self-funded medical – employer; though occasionally the plan sponsor pays. Confirm prior to paying that you are the responsible party.
HRA integrated with fully insured medical* – employer pays for the HRA and medical insurance carrier pays for the medical plan.
HRA integrated with self-funded medical – employer pays for the HRA if the medical plan and HRA have different plan years; HRA fee waived if the medical plan and HRA have the same plan year. Fees due for employees on the HRA but not the medical plan.
HRA stand-alone or FSA stand-alone plans (no medical plan) – employer pays.
|WHEN||Applies for plan years ending on or after October 1, 2012 and before October 1, 2019.|
|HOW||Fee is reported using Form 720, “Quarterly Federal Excise Tax Return,” and paid directly to the IRS. The Form 720 will be due on July 31 of the year following the last day of the policy year or plan year. Note: Payment is due July 31, 2014 for plan years ending January 1, 2013 through December 31, 2013.|
|FEE||Initial annual fee begins at $1 per member for plan years ending on or after October 1, 2012 through September 30,2013.
Fee increases to $2 per member for plan years ending on or after October 1, 2013 through September 30, 2014.
Amount for future years is indexed to national health expenditures. Please refer to the instructions for form 720 for details on how to calculate the fee.
*HRAs combined with a fully insured medical plan pay per employee versus per member.
|ESTIMATED COST||Estimated cost impact to medical plan approximately $0.17 per member per month.|
This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. While every attempt has been made to ensure the accuracy of this information as of the publication date, federal and state rules and interpretation of the ACA continue to evolve and every employer’s circumstances are unique.