As part of the Patient Protection and Affordable Care Act (PPACA), one of the many new excise taxes imposed by this act is again quickly approaching. The Patient-Centered Outcomes Research Institute (PCORI) fee is an excise tax imposed on health insurance issuers and plan sponsors of self-insured health plans effective for plan years ending on or after October 1, 2012. The fee is calculated at $1 per covered life for plan years ending before October 1, 2013 and increases to $2 per covered life for plan years ending after October 1, 2013. This fee is due by July 31 each year with increases corresponding to the medical inflation rate up until 2019.


While many employers with fully-insured plans have already seen these new fees built into their renewal costs, those companies with self-insured health plans need to pay and report this fee with their second quarter excise tax filing on Form 720. Employers whom sponsor a self-fund prescription plan or HRA type plan, will fall into this reporting requirement. The IRS has specifically stated that for these self-insured health plans, third party administrators will not be allowed to collect these fees or file the required Form 720. These PCORI fees must be paid and reported no later than July 31 of the year following the last day of the policy or plan year. This means companies who sponsor and have a self-insured type of health plan will need to act before July 31, 2014.


If you currently file Form 720, you will add this fee to your second quarter report. If you have never filed Form 720 before, there may be some additional registration needed to file and remit the fee. The IRS has issued some preliminary guidance to aid in the method for calculating "covered lives" and often times your plan administrator may have provided you with some details for this calculation.