As a result of the implementation of The Patient Protection and Affordable Care Act (PPACA)–more commonly referred to as Obamacare–a new excise tax will be imposed on employers that sponsor self-insured health plans. This tax is referred to as the Patient-Centered Outcomes Research Institute (PCORI) fee, and it will be assessed on plan years ending after September 30, 2012 and before October 1, 2019. These fees will be collected to fund comparative effectiveness research (CER), which is designed to inform healthcare decisions by analyzing the effectiveness, benefits and risks of different treatment options. The PCORI fee will need to be submitted on the federal excise tax return (Form 720) by July 31 of the calendar year directly following the last day of the employer’s plan year.

The amount of the fee fluctuates over time. For plan years ending October 1, 2012 through September 30, 2013, the fee is $1 multiplied by the average number of covered lives (employees and dependents). For plan years ending October 1, 2013 through September 30, 2014, the fee is $2 multiplied by the average number of covered lives. For plan years ending October 1, 2014 through September 30, 2019, the fee increases based upon the projected per capita amount of National Health Expenditures.

Which Plans Must File?

  • Self-insured plans that provide for accident and health coverage. In general, this covers all health plans, but there are a handful of exemptions for “excepted” benefits
  • Prescription drug plans
  • Dental and vision plans that are not “excepted” benefits
  • HRAs
  • Retiree-only plans
  • Most government plans
  • Church plans

What Plans are not Required to File?

  • Plans primarily designed to cover employees working or residing outside of the USA
  • Employee assistance programs (to the extent they do not provide significant medical care or treatment benefits)
  • Disease management programs (to the extent they do not provide significant medical care or treatment benefits)
  • Wellness programs (to the extent they do not provide significant medical care or treatment benefits)
  • Limited scope vision plans (if separate from the health plan and require an additional employee contribution to elect them)
  • Limited scope dental plans (if separate from the health plan and require an additional employee contribution to elect them)
  • Most FSAs (generally, FSAs are “excepted benefits” under HIPAA. However, if the FSA is not an excepted benefit, the fee would apply)
  • HSAs (however, the high deductible plan, or HDHP, typically would be subject to the fee)
  • Exempt governmental programs (Medicare, Medicaid, CHIP, Armed Forces coverage and certain medical care to Indian tribes)
  • Archer MSAs
  • Stop Loss Policies
  • Indemnity Reinsurance Policies

Additional Considerations:

  • HRAs are generally required to file; however, HRAs integrated with another self-insured plan may be considered as part of a single plan to avoid fee duplication.
  • If multiple self-insured plans sponsored by the same plan sponsor have the same plan year, they may be treated as a single plan to avoid fee duplication.

For more information on the PCORI fee or to find out if you need to file, click here to contact us or call (513) 241-8313.