For those employers with self-insured plans, the annual filing and fee payments deadline is coming up on the Patient-Centered Outcomes Research Institute (PCORI) fee on July 31. IRS Form 720, the Quarterly Federal Excise Tax Return, will be used to report and pay the annual PCORI fee.
The rate to determine the PCORI fee has increased to $2.26, the “applicable dollar amount.” The annual fee is determined by multiplying the applicable dollar amount to the average number of lives covered for the plan year. How the average number of covered lives is determined based on IRS’s prescribed counting methods, which depends on whether the filer is an insurer or plan sponsor. Notably, a plan with a plan year ending before October 1, 2016 will be subject to the previous year’s applicable dollar amount of $2.17. Next year, the applicable dollar amount will be $2.26.
For fully insured plans, the PCORI obligation rests on the insurers. For self-insured plans, the PCORI obligations rests on the “plan sponsor,” which is typically the employer.
The type of self-insured health plans that fall under PCORI include medical coverage and health reimbursement arrangements (HRAs). They do not include most flexible spending arrangements (FSAs) or plans that consist only of “excepted benefits” (such as plans that offer benefits limited to vision or dental), plans that are limited to employee assistance programs, disease management programs or wellness programs if these programs do not provide significant benefits in the nature of medical care or treatment.
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