The Patient Protection and Affordable Care Act imposes an annual Patient-Centered Outcomes Research Institute (“PCORI”) fee on plan sponsors and issuers of individual and group health policies. As a reminder, the PCORI fee was established to research the clinical effectiveness of medical treatments, procedures, and drugs, including evaluating and comparing health outcomes.
The fee applies to fully insured group health insurance policies and to employer sponsored self-insured health plans. The fees for these policies (and plans) apply for each policy or plan year ending on or after October 1, 2012, and before October 1, 2019. For policy/plan years ending on or after Oct. 1, 2013, and before Oct. 1, 2014, the applicable fee is $2 multiplied by the average number of lives (including spouses and dependents) covered under the policy or plan.
The fee owed must be paid on the federal excise tax return Form 720 by July 31st of the calendar year immediately following the last day of the plan (policy) year. While insurance companies are responsible for paying the PCORI fee for fully-insured medical policies, employers sponsoring self-insured medical plans must pay the PCORI fee for those plans. Therefore, for most calendar year plans, employers must pay the PCORI fee for 2013 using Form 720 on or before July 31, 2014.
To read more about PCORI fees, see our prior client alert.
For more information on the PCORI fees, contact your Executive Compensation and Employee Benefits Counsel at Smith, Gambrell & Russell.