Don’t Miss The July 31 Deadline

Seyfarth Shaw LLP

Seyfarth Synopsis:  The IRS announced the new rate for calculating the PCORI fee and provided some transition relief, but did not extend the deadline of July 31st for paying the fee.

In May, the IRS issued Rev. Proc. 2020-32 announcing the 2021 annual contribution limits for Health Savings Accounts (“HSAs”) and the annual out-of-pocket expense limits for High Deductible Health Plans (“HDHP”).  These are the new limits:

  • Annual HSA Contribution Limits: $3,600 for self-only ($50 increase over 2020) and $7,200 for family ($100 increase over 2020)
  • HDHP Minimum Deductibles: $1,400 for self-only and $2,800 for family (no change from 2020)
  • HDHP Annual Out-Of-Pocket Expense Limits: $7,000 for self-only ($100 increase over 2020) and $14,000 for family ($200 increase over 2020)

In June, the IRS published the new applicable rate and guidance for calculating the Patient Centered Outcomes Research Institute (“PCORI”) fee.  As discussed in our blog article, “Thought You Paid Your Last PCORI Fee?  Wrong!” the Further Consolidated Appropriations Act reinstated the PCORI fee for an additional 10 years.  Pursuant to Notice 2020-44, the fee for plan years ending on or after October 1, 2019 but before October 1, 2020, is the applicable rate of $2.54, multiplied by the average number of lives covered under the policy or plan. This is an increase from the previous applicable dollar amount of $2.45 per covered life.

Notice 2020-44 also provides transition relief for counting the average number of covered lives.  Due to the anticipated termination of the PCORI fee for plan years ending after September 30, 2019, plan sponsors likely did not identify the number of covered lives for the 2019 plan year.  In addition to using one of the existing three methods (i.e. the actual count method, the snapshot method, and the Form 5500 method) to calculate the average number of covered lives, plan sponsors are permitted to use “any reasonable method” provided it is applied consistently for the duration of the plan year.

The PCORI fee is payable using IRS Form 720, and must be paid no later than July 31 of the year following the year to which the fee relates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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