Overview
The Affordable Care Act imposes a fee on health insurers and plan sponsors of self-funded health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). PCORI uses those funds to promote research that offers patients and caregivers the information they need to make important healthcare decisions.
Employers may recall that PCORI fees were previously scheduled to sunset for plan years* ending after September 2019. However, Congress recently extended these fees through September 30, 2029, as part of the Further Consolidated Appropriations Act of 2020.
The Internal Revenue Service (IRS) deadline for filing and paying these fees is July 31, 2020, for plan years ending in 2019. As of today, the IRS has not extended this deadline, and we have informally heard that the IRS does not intend to offer an extension. However, that could certainly change given the current climate.
The Internal Revenue Service (IRS) deadline for filing and paying these fees is July 31, 2020, for plan years ending in 2019. As of today, the IRS has not extended this deadline, and we have informally heard that the IRS does not intend to offer an extension. However, that could certainly change given the current climate.
PCORI Fee for Plan Years that Ended Between January and September 2019
The fee for plan years that ended between January and September of 2019 is $2.45 per covered life.
PCORI Fee for Plan Years that Ended in October, November, or December 2019
The fee amount for plan years that ended in October, November, or December of 2019 is $2.54.
*Plan year is generally the 12-month period stated in the Summary Plan Description, or for plans filing a Form 5500, the plan year stated in that filing. NOTE: The plan year may be different from the benefit year or the renewal period.
How to Access Your MedCost Provided PCORI Reports
In an effort to assist you with this filing, MedCost has calculated the average number of covered lives for your appropriate plan year utilizing three of the calculation methods permitted by the ACA: the Actual Count Method (daily), the Snapshot Method (monthly), and the Snapshot Factor Method.
The reports that contain these calculations for your plan will be available on the MedCost employer portal by June 12, 2020. You may elect to use any method to calculate your tax liability; simply multiply the number titled ‘average number of covered lives’ by the fee.
As noted above, the filing and payment must be submitted to the IRS by July 31, 2020.
How to Access Your Files
Go to www.MedCost.com
Click on “for Employers” in the header at the top of the page.
Under “My Account,” select “Login” and enter your username and password.
Choose “Employer Reports.”
Select the “PCORI Reports” folder.
Choose the current report.
How to Pay PCORI Fees
Per the IRS, plan sponsors are responsible for paying the fee, which is treated as an excise tax. A Quarterly Federal Excise Tax Return (Form 720) must be used when reporting liability for the fee. The form can be accessed at https://www.irs.gov/pub/irs-pdf/f720.pdf. Instructions for completing and filing the form can be accessed at http://www.irs.gov/pub/irs-pdf/i720.pdf. Completion of the form is quite simple; only the relevant parts of the form need to be completed, which includes:
Identifying information at the beginning of the form (Please note, for the purpose of this form, this is considered a filing for the 2nd quarter, ending June 30, 2020)
Part II, line 133 (“Applicable self-insured health plans” line)
Part III, items 3 and 10
The signature section
The voucher form, if the form is mailed
The form may be filed electronically or mailed to:
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0009
Additional Helpful Information
The plan sponsor must apply a single calculation method in determining the average number of lives covered under the plan for the entire plan year. However, the plan sponsor is not required to use the same method from one plan year to the next.
A self-insured Health Reimbursement Account (HRA) is not subject to a separate fee if the HRA is integrated with another applicable self-insured health plan that provides major medical coverage. The HRA and the other plan must be established or maintained by the same plan sponsor with the same plan year. However, if a self-insured HRA is integrated with an insured group health plan, then the fee must be paid for both the self-insured product and the insured product.
Excepted benefits (as defined under section 9832c of the U.S. Code) are exempt from the fee, as is a health Flexible Spending Account (FSA) that satisfies the requirements of an excepted benefit.
If an HRA or health FSA is determined to be subject to the fee, the regulation permits the plan sponsor to assume one covered life for each employee with an HRA and for each employee with a health FSA (due to the unavailability of information on the lives covered – dependents – under a HRA or Health FSA).
All plans that provide medical coverage to employees owe this fee. There is no exception for small employers, or for government, church or not-for-profit plans, nor for grandfathered plans or union plans. The fee is tax-deductible.
For more information, see:
An IRS chart that shows which plans owe the fee:
If you have questions about any of this information, please contact your Account Manager. Thank you for allowing us to serve you.