Brian Wynne, CPA

As part of the Affordable Care Act, the IRS was charged with collecting a fee from health insurers and plan sponsors of self-insured plans each year, for seven years, to help fund the Patient-Centered Outcomes Research Institute (PCORI). These so-called “PCORI Fees” are a set fee based on the average number of lives covered by the plan during the year. The fee started at $1 but increases with inflation, and is currently at $2.08 per average number of lives covered for years ended after September 30, 2014 and before October 1, 2015. The fees should stop being collected beyond years ending after October 1, 2019.
Under most plans, the health insurer is responsible for paying the fee and filing. However, if you have a self-insured plan, the plan sponsor is responsible. That is usually the employer in a self-insured plan.
Under a self-insured plan, the employer must file Form 720 (Quarterly Federal Excise Tax Return) and pay the fee using the Electronic Federal Tax Payment System (EFTPS). The form and fee are due July 31, 2015. The form itself is very simple but there is some nuance in calculating the average number of covered lives. More details on that calculation can be found in IRB 2012-52.

The IRS has a detailed Q&A here.
If you need help filing the form, or have any questions, please feel free to contact Bond Beebe.

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