It's That Time Again! PCORI Fee is DUE July 31st

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This Alert Applies To:

* Self-Funded Only

* Large Group (Over 50 lives); self-funded only

* Small Group (Under 50 lives); self-funded only


With July 31 around the corner, it's time to start thinking about PCORI and what you're required to pay or do under the ACA. As you may know, the Affordable Care Act (ACA), imposes an annual fee per enrollee on most insured and self-insured group health plans through 2019 in order to support clinical effectiveness research. The PCOR fee is due by July 31 of the calendar year following the close of the plan year. For plan years ending in 2014, the fee is due by July 31, 2015.


PCORI fees are required to be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. The due date of the return is July 31.  Although Form 720 is a quarterly return, for PCORI, Form 720 is filed annually only, by July 31.  The PCORI fee is assessed based on the number of participants that are covered by the plan. For plan years ending on or after October 1, 2013 and before October 1, 2014, the rate is $2.00 multiplied by the average number of lives (employees and dependents) covered under the plan for the plan year.  For plan years ending on or after October 1, 2014, and before October 1, 2015, the fee is $2.08 multiplied by the average number of lives covered under the plan for the plan year. Per the IRS, the fee is tax-deductible as a business expense.



Given the due date of when the fee is to be paid, the information below provides a summary of the rules related to the PCORI Fees, as well as a quick reference guide for calendar and non-calendar year plans.


Plan Year

Fee Per Average Covered Life Due Date
2/1/2013-1/31/2014 $2.00 7/31/2015
3/1/2013-2/28/2014 $2.00 7/31/2015
4/1/2013-3/31/2014 $2.00 7/31/2015
5/1/2013-4/30/2014 $2.00 7/31/2015
6/1/2013-5/31/2014 $2.00 7/31/2015
7/1/2013-6/30/2014 $2.00 7/31/2015
8/1/2013-7/31/2014 $2.00 7/31/2015
9/1/2013-8/31/2014 $2.00 7/31/2015
10/1/2013-9/30/2014 $2.00 7/31/2015
11/1/2013-10/31/2014 $2.08 7/31/2015
12/1/2013-11/30/2014 $2.08 7/31/2015
1/1/2014-12/31/2014 $2.08 7/31/2015
2/1/2014-1/31/2015 $2.08 7/31/2015
3/1/2014-2/28/2015 $2.08 7/31/2015
4/1/2014-3/31/2015 $2.08 7/31/2015
5/1/2014-4/30/2015 $2.08 7/31/2015
6/1/2014-5/31/2015 $2.08 7/31/2015
7/1/2014-6/30/2015 $2.08 7/31/2015
8/1/2014-7/31/2015 $2.08 7/31/2015
9/1/2014-8/31/2015 $2.08 7/31/2015
10/1/2014-9/30/2015 $2.08 7/31/2015


The IRS recently released the revised Form 720 (Quarterly Federal Excise Tax Return), which is the form used by plan sponsors of group health plans to report and pay the annual PCORI fee. (Please note that while Form 720 is filed quarterly for several other federal excise taxes, the PCORI fee is only required annually, on the second-quarter filing.  Accordingly, if a plan sponsor files Form 720 only to report PCORI fees, a Form 720 should not be filed for the first, third, or fourth quarter.)

Below are the links to the Form 720 and corresponding instructions:

The plan sponsor completing Form 720 must report the average number of covered lives (employees and dependents) under its plan(s) subject to the PCORI fee. The instructions with respect to PCORI are contained on pages 8 and 9 of the Instructions for Form 720 under Part II (the first portion of the instructions apply to health insurance policies, as opposed to self-funded health plans).  In a nutshell, these instructions briefly reference the alternative methods for calculating the average number of lives covered by a plan for the applicable plan year, and how to complete the Form 720. 


With respect to the Form 720 itself, the line item for the PCORI fee to be reported is referenced at the beginning of Part II.  This line item is divided between "Specified health insurance policies" and "Applicable self-insured health plans."  The form then requires the plan sponsor to list the average number of covered lives for its self-funded plan, which in turn is multiplied by either $2.00 or $2.08 (depending on the plan year) for a final dollar amount to be paid to the Federal government.  (While the instructions linked to this Update do not reference the $2.08 fee, at least as of the date of this Update, such fee is in fact applicable as discussed above.) 


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The information provided is for educational purposes only. This information is from sources we believe to be reliable, but we cannot guarantee or represent that it is accurate or complete. The opinions are those of the writer, and the opinions and information presented are subject to change without notice.

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