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PCORI Fees Due to IRS By July 31

Posted on May 15th, 2015

The third installment of the Patient-Centered Outcomes Research Institute (PCORI) fees will be due on July 31, 2015. As its name suggests, PCORI is a research institute, and it was created by the Affordable Care Act (ACA) as a way to improve clinical effectiveness. It is partially funded by fees charged to health plans. Here is information and some reminders about the upcoming fee that is due.
 
  • The fee is paid on the average number of covered lives for the plan year ending in 2014.
  • The IRS has several different methods that can be used to calculate the average number of covered lives. The “snapshot method” is one of the most popular methods, whereby the employer picks one day during each quarter of the plan year, adds the total number of covered lives for those days, and divides that number by 4.
  • Plan years ending between 1/1/14 and 9/30/14: Fee is $2 per covered life.
  • Plan years ending between 10/1/14 and 12/31/14: Fee is $2.08 per covered life.
  • The fee is paid by the insurance company for fully insured plans.
  • The fee is paid by the employer for self-funded plans via Form 720.
  • Health Care Flexible Spending Accounts (FSAs) that are considered excepted benefits aren’t subject to the fee
  • Employers with a fully insured major medical plan and an integrated Health Reimbursement Arrangement (HRA) are subject for paying the fee on the HRA, but they may treat each HRA participant as a single covered life.
  • Employers with a self-insured major medical plan and an integrated HRA may treat the coverage as a single plan assuming they have the same plan year.
  • Stand-alone dental/vision plans, including HRAs, are not subject to the fee.    
 

View last year's PCORI fee blog post which includes more details on the special rules for HRAs and Health FSAs.

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The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice. 
 

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