[author: Tracy Morley, XpertHR Legal Editor]
The Internal Revenue Service (IRS) issued a final rule providing guidance on the Patient-Centered Outcomes Research Institute (PCORI) fee. The PCORI fee is imposed on health insurance issuers and employers that sponsor self-insured plans to finance the Patient Centered-Outcomes Research Institute trust fund established under the Affordable Care Act (ACA). The final rule applies to policy and plan years ending on or after October 1, 2012, and before October 1, 2019.
The fee imposed on issuers of specified health insurance policies and sponsors of self-insured plans is $2 ($1 for policy years ending before October 1, 2013) multiplied by the average number of lives covered under the policy or plan. For policy or plan years that end on or after October 1, 2014, the fee is increased based on increases in the projected per capita amount of national health expenditures.
Under the regulations, a specified health insurance policy is defined as any accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States. The rules do not apply to employee assistance programs (EAPs) or disease management and wellness programs as long as such programs do not provide significant benefits in the nature of medical care or treatment. Additionally, the rule does not apply to HIPAA excepted benefits.
The final rule applies the PCORI fee to policies and plans that provide accident and health coverage to retirees, including retiree-only policies, and explicitly states that, unless otherwise excluded, coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) (and other types of continuation coverage) must be taken into account in determining the PCORI fee.
The final rule does not adopt commentator requests that PCORI fees apply only once with respect to individuals covered under more than one policy or plan. However, the rule does allow a self-insured health plan that provides accident and health coverage through both fully-insured and self-insured options to determine the PCORI fee by disregarding lives that are covered solely under the fully-insured options.
Additional Resources
Health Care Reform Resource Center
Health Care Reform Timeline - Chart
Employee Benefits > Health Care Benefits
