Reminder: PCORI fees due July 31st for Self-Funded Employers

 July 2 2018     Shelly Hodges-Konys
The deadline for paying the annual Patient-Centered Outcomes Research Institute (PCORI) fee to the IRS is rapidly approaching. As a reminder, under the ACA, all medical plans are responsible for paying the fee. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. However, when it comes to self-funded plans, including health reimbursement arrangements (unless deemed part of another self-funded plan with the same plan year), the employer/plan sponsor must file the Form 720 and pay the fee directly to the IRS (unless considered an excepted benefit).

The fee, based on the number of plan participants, varies depending on when the plan year ends and is adjusted for inflation annually. For plan years ending on or after October 1, 2016 and before October 1, 2017 the fee is $2.26; for plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39 per covered life. For example, for plan years that run July 1 through June 30th, the fee is $2.26. For calendar year plans ending December 31st, the fee is $2.39 per participant for the 2018 filing. The fee is deemed the responsibility of the employer/plan sponsor and should not be paid from plan assets.

Form 720 is due on July 31st of the calendar year following the last day of the plan year. For example, if your medical plan year ended in 2017, your Form 720 is due by July 31, 2018. The Form 720 and instructions are available on the IRS website.

We often receive questions regarding Form 720, Part II and how to calculate the average number of lives covered. As a reminder, there are four different methods employers may choose from including actual count, snapshot actual, snapshot factor, and Form 5500 method. In the instance that an employer sponsors two self-funded health plans (for example, a health plan and a health reimbursement arrangement), each person covered by both plans is only counted once as long the plan year is the same for both plans. When it comes to choosing a reporting method, most ERISA covered plans use the Form 5500 method (because of the ease of calculation) and most public employers use a snapshot count provided by their claims administrator. If you need assistance, please contact your HORAN account representative and we will assist you.