Deadline Approaching for PCORI Tax Filing

Sponsors of self-insured health plans are required to report and pay the patient-centered outcomes research fee (PCORI) fee by July 31, 2014. The most significant change this year is an increase in the applicable fee. For plan sponsors of self-insured health plans, the fee for a plan year ending on or after October 1, 2013 is $2.00 ($1.00 for a policy year ending before October 1, 2013), multiplied by the average number of lives covered under the plan for the plan year.

General information concerning PCORI fees can be found in a previous post. We also previously discussed the available ways to calculate the number of lives covered under a plan in this post. The rate of PCORI fees will continue to increase in the following years based on projected increases in National Health Expenditures.

In addition to the rate increase, more plan sponsors will be required to file the Form 720 during 2014. In 2013, plan sponsors of plans with a plan year ending before October 1, 2012 did not have to pay the fee. Beginning in 2014, all plan sponsors of applicable self-insured health plans will be subject to the fee and must pay it using Form 720. These changes, as well as the rate changes, are reflected in the April 2014 revision of both the Form 720 and Form 720 instructions.

There is no concrete data available concerning the number of plans subject to the fee in 2013. However, it is estimated that the cumulative PCORI fees collected for 2013 totaled $130 million. Due to the increased rate and larger pool of plan sponsors subject to the fee, this number should more than double in 2014.

There has been a significant negative reaction among employers to the fee. Until the federal government is able to demonstrate tangible results directly related to collection of this fee, it is likely that the protests will continue.

About Jim Hamilton

I am an employee benefits partner with Bose McKinney & Evans LLP. My broad-based practice covers health and welfare arrangements, insurance, executive compensation and federal and state taxation. Among other areas, I have specific experience with PPACA, HIPAA, COBRA, ERISA and numerous other state and federal laws affecting employee benefit plans.
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