Keyword: PCORI

Health Provisions in the Consolidated Appropriations Acts

Posted on by Megan England

On December 20, 2019, spending legislation was enacted which contains provisions affecting group health plans.  This legislation is comprised of the Consolidated Appropriations Act and the Further Consolidated Appropriations Act.  These Acts repeal three Affordable Care Act taxes but also extend the Patient Centered Outcomes Research Institute (PCORI) fees. 

The three repealed taxes include:

  • The Cadillac tax – a 40% excise tax on high-cost health plans
  • The Health Insurance Providers Fee for calendar years starting after December 31, 2020
  • The medical device tax for sales after December 31, 2019

The Cadillac tax was scheduled to go into effect on January 1, 2022 after a number of delays.  The medical device tax has been suspended since 2016 but was scheduled to go into effect in 2020.  These taxes have now been permanently repealed.  The health insurance providers fee began in 2014 but had been suspended for 2017 and 2019.  The fee returned for 2020 but is now repealed for 2021 and all future years.

PCORI fees had been in effect for plan years ending prior to September 30, 2019 and the seven years prior.  This fee has been reauthorized for another 10 years and applies to all self-insured group health plans and health insurers. 

PCORI Fees Due July 31st

Posted on by Megan England

The ACA established the Patient Centered Outcomes Research Institute (PCORI) to fund research that can help patients and those who care for them make better-informed decisions about the healthcare choices they face every day, guided by those who will use that information.  The research is funded in part by health insurers and sponsors of self-insured plans through PCORI fees.

Generally, the PCORI fees apply to group health plans (including self-insured plans).  The IRS chart found HERE describes which health plans are subject to the fee.  Those health plans are required to report and pay fees annually using IRS form 720.  Form 720 is due July 31, 2017 for plan years ending in 2016 along with payment in the following amount:

  • $2.17 per covered life for plan years ending between January 1, 2016 and September 30, 2016
  • $2.26 per covered life for plan years ending between October 1, 2016 and December 31, 2016

There are three methods for calculating the number of covered lives:

  1. Actual Count Method – Calculate the lives covered for each day of the plan year and divide by the number of days in the plan year.
  2. Snapshot Method – Add the lives covered on a date during the first, second, or third month in each quarter, or an equal number of dates for each quarter, and divide the total by the number of dates on which a count was used. There are two methods for counting family members: Count the actual lives covered on the designated date; or Count the participants on the designated date and multiply by 2.35.
  3. Form 5500 Method – Add the participants at beginning of year and end of year as reported on the Form 5500 for the plan year (this method may be used only if the Form 5500 is filed no later than the due date for the fee imposed for that plan year).

For more information, click HERE for a question and answer page provided by the IRS.

PCORI Fee Increase for Plan Years Beginning on or After October 1, 2015

Posted on by McKeogh Administrator

The applicable dollar amount to determine PCORI fees will increase from $2.08 to $2.17 for plan years ending after September 30, 2015 and before October 1, 2016 according to Notice 2015-60 issued by the Internal Revenue Service (IRS) on October 9th.

Health insurance issuers and self-funded health plans are required to pay PCORI fees for Plan Years ending on or after October 1, 2012 and on or before September 30, 2019. These fees help fund the Patient-Centered Outcomes Research Institute (PCORI). The fee amount is calculated by multiplying the average number of covered lives during the Plan Year by the applicable dollar amount for that Plan Year.

The applicable dollar amount for each Plan Year is:

Plan Year ending between October 1, 2012 and September 30, 2013 $1.00
Plan Year ending between October 1, 2013 and September 30, 2014 $2.00
Plan Year ending between October 1, 2014 and September 30, 2015 $2.08
Plan Year ending between October 1, 2015 and September 30, 2016 $2.17

PCORI Fee Announced for Year 3 of Program

Posted on by McKeogh Administrator

The Internal Revenue Service (IRS) issued Notice 2014-56 announcing the PCORI fees applicable to health plans for plan and policy years ending on or after October 1, 2014 and before October 1, 2015 is $2.08. These fees are calculated using an average number of covered lives and an annually announced applicable dollar amount. The applicable dollar amount for plan and policy years ending on or after October 1, 2012 and before October 1, 2013 was $1.00. This dollar amount was increased to $2.00 for plan and policy years ending on or after October 1, 2013 and before October 1, 2014.

For policy years and plan years ending October 1, 2015, through September 30, 2019, the adjusted applicable dollar amount will be published in future guidance in the Internal Revenue Bulletin.