The passage of the Patient Protection & Affordable Care Act (PPACA) extends many rights and protections to employees. Established by the PPACA, the Patient-Centered Outcomes Research Institute (PCORI) is charged with examining the “relative health outcomes, clinical effectiveness, and appropriateness” of different medical treatments. The Institute will evaluate existing studies and conduct its own, with funding, in part, by employer-paid fees.

Initial mandates include a new fee imposed on employers and insurance carriers for seven years. Due each July 31st, this fee is now set to affect clients with plan years ending 2012 through 2019.

Fee Amounts for Plan Years:

  • Ending October 1, 2013 – September 30, 2014, the fee is $2 per covered life
  • Ending October 1, 2014 – September 30, 2015, the fee is $2.08 per covered life
  • Ending October 1, 2015 – September 30, 2019, fee is yet to be determined
  • On or after October 1, 2019, the fee no longer applies

If your Health Reimbursement Account (HRA) plan started after July 1, 2014, there will be no fees due this year.

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 that third parties cannot report or remit the fees on behalf of plan sponsors.

HR Knowledge will work with your HRA vendor and secure the correct number that you will need to enter on IRS Form 720. If you already file this form, you will simply be filling out one more section (Page 2, Part II, IRS No. 133) for your 2nd Quarter return. For the 1st, 3rd and 4th Quarters, leave this section blank. If you currently do not file an IRS Form 720, we will send you one with instructions on filling in this section, or you can download it from the IRS website.

Further information can be found here.

If you have any questions regarding the PCORI fees, policy or compliance, please contact HR Knowledge at 508.339.1300 or e-mail Linda Sullivan, Ancillary Benefits Specialist, at Linda@hrknowledge.com.

This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this advisory, please contact HR Knowledge at 508.339.1300 or email us at HR@hrknowledge.com.