PCORI Fees Due July 31, 2015
You are receiving this e-mail to assist you in the payment and calculation of the Patient Center Outcome Fees” OR “PCORI Fees”. The fees are a requirement under Health Care Reform to help finance the Patient-Centered Outcome Research Institute (the “Institute”). The Institute is a private, nonprofit corporation established under Health Care Reform to fund research of the clinical effectiveness of medical treatments, procedures, drugs, and other strategies or items that treat, manage, diagnose, or prevent illness or injury.
This is the third year that PCORI fees are required to be filed by insurance companies and certain plan sponsors. For the past two years, the most common filing requirement impacted employers with Health Reimbursement Arrangements (HRAs) under a fully-insured health plan. However, new for this year, employers with a self-funded medical plan will also need to comply with this fee. Therefore, all HRA based clients of Trinity Benefit Advisors as well as some “Self-Funded” clients need to comply with the July 31, 2105 deadline to file/pay these fees.
What companies & organizations need to pay the Fee?
This fee is payable for TBA clients that had a Health Reimbursement Arrangement (HRA) OR have a Self-Funded Medical Insurance plan. This includes some groups that are currently enrolled in the VERIS Consortium.
What is the amount of the Fee?
If your plan year ended between January 1, 2014 and on/before September 30, 2014, the fee is $2.00 per covered life. If your plan year ended between October 1, 2014 and December 31, 2014, the fee is $2.08 per covered life.
How do I calculate the fee if I offer an HRA?
We recommend utilizing a formula that averages the amount of employees on the HRA plan during the year- this is called the “5500 Method” Under this method you will add the total number of employees on the 1st day of plan year and add the total number of employees on the last day of plan year and divide by 2. This will give you the average number of lives covered during the plan year. You will pay the PCORI fee based on the average number of employees.
How do I calculate the fee if I have a level or self-funded medical plan?
Sponsors of self-insured plans are required to pay the fee for each “Covered Life” under the plan. “Covered lives” includes not only employees, but also covered spouses, dependents, retirees and COBRA qualified beneficiaries. Similar to the HRA calculation, we recommend you utilize a formula that averages the amount of employees on the plan during the year. Under this method you will add the total number of “covered lives” on the 1st day of plan year and add the total number of “covered lives” on the last day of plan year and divide by 2. This will give you the average number of lives covered during the plan year. You will pay the PCORI fee based on the average number of covered lives.
What if I have a self-funded medical plan and I have an underlying HRA to cover deductibles or copays, do I need to pay the PCORI fee for both programs and make a double payment?
Generally speaking no. Only if the self-funded medical plan and the HRA have a different renewal date. All Trinity Benefit Advisor clients have medical plans matching their HRA renewal dates. Therefore, self-funded clients should pay the PCORI fee based on the self-funded medical plan only and should not pay a separate fee for the HRA.
Do I need to pay a PCORI Fee for H.S.A. or FSA Accounts?
H.S.A. bank accounts are not subject to the PCORI Fees. FSA Accounts are also not subject to the fee unless the EMPLOYER places more than $500 into an Flexible Spending Account (FSA) on behalf of the employee – this is very uncommon for TBA clients.
How do I pay the PCORI Fee?
IRS Tax Form 720, which is an Excise Tax Filing is the form in which you will record these fees. We recommend you work with your corporate accountant or tax accountant on the completion of this form so you can comply with the July 31, 2015 filing deadline. The 720 form and instruction are located for your review in the link below:
For your convenience we have attached a few items for your review:
Overview on PCORI fees [PDF]
Schedule and Timeline of fees from the IRS site [PDF]
Please contact the MEA Expert Hotline at 610-994-7631 if you have any questions.
*This Alert was provided by MEA in partnership with Trinity Benefits Advisors. MEA and Trinity Benefits Advisors are dedicated to providing timely and accurate advice and resources as Members seek to develop competitive and compliant employee benefits programs. This MEA Member Alert is provided for general informational purposes only and does not constitute legal advice.