Under the Patient Protection and Affordable Care Act “PPACA,” certain types of health insurance arrangements will be required to pay a new fee by July 31, 2013. The fee is called the Comparative Effectiveness Research Fee or the PCORI fee because the monies will be used to help fund the Patient-Centered Outcomes Research Institute. The types of arrangements subject to the fee are:
The fee will be reported to the IRS via Form 720, but the revised Form 720 has not yet been made available.
In general, plans with year-ends between October 1, 2012 and December 31, 2012 must file Form 720 and pay the fee by July 31, 2013 while plans with year-ends between January 1, 2013 and September 30, 2013 have until July 31, 2014 to meet the fee and reporting requirements.
The fee is based on the average number of covered lives during the plan year. Covered lives include the covered employees of the plan sponsor and all other covered dependents. The IRS has prescribed four methods for counting average number of employees.
The amount of the fee is:
In fully insured arrangements, the insurance companies have indicated that they will be facilitating payment of the fee. However, it remains unclear as to whether they will be handling completion of the Form 720. Self-insured plans are required to both pay the fee and submit Form 720. Unlike other aspects of the Act, the PCORI fee requirement is applicable to all affected plans regardless of employer size.