As part of the Affordable Care Act, insurance companies offering certain health insurance policies and employers, including public agencies, that sponsor certain self-insured plans may be responsible for reporting and paying a Patient-Centered Outcomes Research Institute fee (PCORI Fee) by July 31. The Patient-Centered Outcomes Research Institute was established by the Affordable Care Act to aid patients, health care providers and policy-makers in making informed health decisions through the advancement of clinical effectiveness research. The Institute is funded, in part, by fees imposed on issuers of health insurance policies and sponsors of self-insured health plans.
Self-insured health plans, such as group health plans, health reimbursement arrangements (HRA) and limited types of flexible spending accounts (FSA), are subject to the PCORI Fee for policy years ending after September 30, 2012 and before October 1, 2019. The PCORI Fee, however, does not apply to plans that offer only what are considered “excepted benefits” under the Internal Revenue Code. Examples of “excepted benefits” include stand-alone dental or vision plans, or FSAs funded solely with employee salary reduction contributions.
The PCORI Fee for plan years ending after September 30, 2012 but before October 1, 2013 is $1.00 multiplied by the average number of lives covered under the plan. The fee increases to $2.00 for plan years ending after September 30, 2013 but before October 1, 2014, and in subsequent years is adjusted for increases in health care spending. The regulations provide three alternative methods to determine the average number of lives covered by a self-insured health plan, and in some cases multiple self-insured plans of a single employer will be treated as a single plan. The PCORI Fee is considered a deductible ordinary and necessary business expense.
The PCORI Fee must be reported on the recently revised IRS Form 720, which is due along with the fee by July 31 of the calendar year that immediately follows the last day of the plan year to which the fee applies. For calendar year self-insured health plans first subject to the PCORI Fee for 2012, the Form 720 and payment of the PCORI Fee are due by July 31, 2013.