2016 PCORI Fee Reminder

PCORI Fee Overview and Guidance

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of any plans that ended in 2015 must pay the 2015 fee by July 31,2016.  Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2016 include:

  • Health/accident plans
  • Health Reimbursement Arranagement (HRA) plans that are not an excepted benefit (Employer contribution is greater than $500)
  • Health Flexible Spending Account (FSA) plans that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year.

  • For plan years that end on or after October 1, 2014, and before October 1, 2015, the fee is $2.08.
  • For plan years that end on or after October 1, 2015, and before October 1, 2016, the fee is $2.17.

For policy and plan years beginning on or after Oct. 1, 2016, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 and Instructions:

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.

 

The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.

 

 

Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers

• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

IRS Form 720 Overview

IRS Form 720 instructions (see pages 8 to 9)

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (Updated June 16, 2016)


2015 PCORI Fee Reminder

PCORI Fee Overview and Guidance

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of any plans that ended in 2014 must pay the 2014 fee by July 31,2015.  Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2015 include:

  • Health/accident plans
  • Health Reimbursement Arranagement (HRA) plans that are not an excepted benefit (Employer contribution is greater than $500)
  • Health Flexible Spending Account (FSA) plans that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year.

  • For plan years that end between January 2, 2014, and before October 1, 2014 the fee will be $2.
  • For plan years that end on or after October 1, 2014, and before October 1, 2015, the fee is $2.08.
  • For plan years that end on or after October 1, 2015, and before October 1, 2016, the fee is $2.17.

For policy and plan years beginning on or after Oct. 1, 2015, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 and Instructions:

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.

 

The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.

 

 

Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers

• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

IRS Form 720 Overview

IRS Form 720 instructions (see pages 8 to 9)

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (June 4, 2015)


PCORI Fee Increase for New Plan Years

The adjusted applicable dollar amounts for PCORI fees were recently released in IRS Notice 2014-56. For plan years ending on or after October 1, 2014 – September 31, 2015 the fee has been increased to $2.08 per covered life. This is an increase of $0.08.  Please refer to our prior guidance on PCORI fees or contact our Sales or Client Relations teams if you have any additional questions.


PCORI Fees

IRS Form 720 and Instructions

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of calendar year plans must pay the 2013 fee by July 31,2014. Any plan ending January 2, 2013 – December 31, 2013 would have to pay the fee by July 31, 2014. Any plan ending January 2, 2014 - December 31,2014 will have to pay the fee by July 31, 2015. Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2014 include:

  • Health/accident plans
  • HRAs with a plan year that began 1/1/2013 that are not an excepted benefit (Employer contribution is greater than $500)
  • Health FSAs with a plan year that began 1/1/2013 that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year. For policy and plan years ending after Sept. 30, 2012, and before Oct. 1, 2013, the applicable dollar amount is $1. For policy and plan years ending after Sept. 30, 2013, and before Oct.1, 2014, the applicable dollar amount is $2. For policy and plan years beginning on or after Oct. 1, 2014, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.

 

The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.

 

 

Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers
• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (June 14, 2014)


PCORI Fees for Employers

HRC Total Solutions would like to provide our clients and partners the important next steps related to the PatientCentered Outcomes Research Institute (PCORI) fee. Some critical questions include the following:

What plan years must pay by July 31, 2013?
The final regulations confirm that plan sponsors will be required to report and pay the PCORI fee for a plan
year no later than July 31 of the calendar year immediately following the last day of such plan year. This means
that sponsors of calendar year plans or plans with plan years that began between October 2, 2011 and December31, 2011 must make their initial payment of the PCORI fees by July 31, 2013.

What plan years must pay by July 31, 2014?
Any plan years that began on January 2, 2012 –December 31, 2012 will have to report and pay the PCORI fee
by July 31, 2014.

How do we make payment?
The fees must be paid annually using Tax Form 720 (Quarterly Federal Excise Tax Return Form) and generally
will be due by July 31 of the calendar year immediately following the last day of the policy or plan year. The final
regulations also confirm thatthird parties cannot report or remit the fees on behalf of plan sponsors.

How do we calculate the fees?
The Snap Shot Method of Calculation shall be used to determine average number of covered lives. The SnapShot Method is defined by the IRS as follows:

  • Count the total number of covered lives on a single day in a quarter (or more than one day) and divide the total by the number of dates on which a count was made. (The date or dates must be consistent for each quarter.)
  • For HRA purposes we use the start date and take the fifteenth (15th) of each month within the plan start and end date and then divide those totals by the total number of dates. If multiple plans are being calculated at the same time they will be counted by plan the average lives will be determined (rounded up) and then added together for the total.

How will HR Concepts assist?
HR Concepts will make a new report available to all of our clients prior to July 1 called the PCORI Average
Covered Lives Report. Employers will use this report to calculate the PCORI fee that is to be paid by the Employer using the Form 720. If you need this report you will need to request it from your Account Executive or Client Manager and they will provide it to you. Please note this reporting capability will not be available to us until the middle of June.

What is the applicable fee amount?

  • $1 for plan years ending on or after October 1, 2012 and before October 1, 2013.
  • $2 for plan years ending on or after October 1, 2013 and before October 1, 2014.
  • For subsequent plan years ending before October 1, 2019, the fee will be adjusted for projected increases in national health expenditures.

What are the most recent updates to this legislation?
The final regulations do not exempt health reimbursement arrangements (HRAs) and health flexible spending accounts (FSAs). In fact, HRAs and FSAs may be subject to PCORI Fees in their own right (in addition to PCORI Fees related to the plan sponsor’s group health plan) under certain circumstances. Please note:

  • Multiple self-insured arrangements established and maintained by the same plan sponsor and having the same plan year are subject to a single PCORI Fee.
  • An HRA that is integrated with a self-insured health plan providing major medical coverage will not incur a separate PCORI fee if the HRA and plan are established or maintained by the same plan sponsor.
  • An HRA that is integrated with a fully-insured group health plan is treated as an applicable self-insured health plan and is subject to the PCORI Fee. Additionally, the insurer of the group insurance policy is subjectto the PCORI Fee separately.
  • A health care FSA is not subject to the PCORI Fee if it meets the requirements of an “excepted benefit” under Code §9832(c).
  • The PCORI Fee does not apply if substantially all of the coverage is for excepted benefits under Code §9832(c) (for example, certain limited-scope dental and vision benefits).
  • Employee assistance programs (EAPs) and wellness programs are not subject to the PCORI Fee if they do not provide “significant benefits relating to medical care.”

How to determine if a Health FSA meets the excepted benefit definition:
If your FSA is considered an excepted benefit per IRS Code §9832(c),the FSA will be exempt from the PCORI fee.
Please see below to determine whether your FSA is considered an Excepted Benefit or not.

Two simple conditions:

Maximum Benefit Condition. The maximum benefit payable under the health FSA is the total of employer plus employee contributions. The maximum benefit cannot exceed the greater of 1) two times the employee’s annual health FSA election, or 2) the employee’s annual health FSA election plus $500.

  • Therefore, if the health FSA is funded exclusively by employee salary reductions, they will, by definition, meet the excepted benefits rule, if they also meet the Availability Condition (#2 below).
  • A health FSA with employer contributions will satisfy the Maximum Benefit Condition only if the employer matching contribution does not exceed the greater of the participant’s salary reduction, or $500.

Examples of Health FSA funding that meet the Maximum Benefit Condition:

  • A one-for-one employer match (employer $600, employee $600).
  • An employer contribution of $500 or less (employer $500, employee $200).

Examples of Health FSA funding that do not meet the Maximum Benefit Condition:

  • An employer contribution that is made regardless of whether the employee contributes (employer $500, employee $0)
  • An employer contribution of more than $500, if employee contributes $500 or less (employer $600,employee $400).
  • An employer contribution in excess of one-to-one match, if employee contributes more than $500 (employer contributes $700, employee contributes $600).

Availability Condition. There must be another non-excepted group health plan (like major-medical coverage)available to the class of employees that are eligible for the FSA.

If you have any further questions on what makes your FSA an Excepted Benefit, please consult your legal or tax
advisor for further clarification.


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