If you sponsor a self-funded health plan, including a health reimbursement arrangement (HRA) or flexible spending account (FSA), you may be subject to the annual PCORI fee. A plan may be subject to the fee even if you are not required to file an annual Form 5500 for that plan (e.g., less than 100 participants). The PCORI fee is due by July 31 of the calendar year following the plan year end and is remitted with Form 720, Quarterly Federal Excise Tax Return.
According to the IRS website, the PCORI fee was instituted by the Affordable Care Act to help fund the Patient-Centered Outcomes Research Institute, an organization created to “assist, through research, patients, clinicians, purchasers and policy-makers, in making informed health decisions by advancing the quality and relevance of evidence-based medicine.” The PCORI fee is only temporary, currently applying to self-funded plans with plan years ending before October 1, 2019.
Generally, all self-insured plans that provide for accident and health coverage are subject to the PCORI fee. Many types of HRAs and FSAs, however, may be exempt from the fee, such as those that only provide excepted benefits, such as vision or dental benefits.
The PCORI fee is equal to the average number of lives covered by the plan during the plan year multiplied by the applicable dollar amount for the year. For plan years ending in January – September of 2015, the applicable dollar amount is $2.08 per covered life. For plan years ending in October – December of 2015, the applicable dollar amount is $2.17 per covered life. Plan sponsors are permitted to assume one covered life for each employee with an HRA or FSA.
The average number of lives covered by the plan during the plan year may be calculated one of four ways. Plan sponsors may change methods from one year to the next so employers with a large number of covered employees should consider evaluating the optimal method each year to minimize the fee.
See the links below for more information on the PCORI fee and filing requirements. For assistance in determining whether your plan is subject to the PCORI fee and how to calculate and remit the fee, contact your local CBIZ MHM tax professional who will connect you with one of our employee benefit plan specialists.
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