Plan sponsors of self-insured group health plans and issuers of health insurance policies must report and pay a new fee to fund the Patient-Centered Outcomes Research (PCOR) Trust Fund (the “PCOR Fee”). The Affordable Care Act established the PCOR Trust Fund to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence-based medicine through developing and compiling comparative clinical effectiveness research findings.
The PCOR fee is imposed on sponsors of self-insured health plans and issuers of health insurance policies for each plan year or, for health insurance issuers, policy year, ending on or after October 1, 2012 and before October 1, 2019. The PCOR fee is equal to the product of (i) the average number of lives covered under the plan (or policy) for the plan or policy year and (ii) the applicable dollar amount. The applicable dollar will increase each year, and is $1 for the plan year ending on or after October 1, 2012 and before October 1, 2013, and is $2 for a plan year ending on or after October 1, 2013 and before October 1, 2014. For plan or policy years beginning on or after January 1, 2014, the fee is adjusted pursuant to the regulations. For employers with self-insured arrangements, there are three methods for counting the average number of covered lives for purposes of calculating the PCOR fee, including an actual count method (add up the number of employees covered under the self-insured arrangement on each day of the plan year and divide the aggregate total by 365), snapshot method (averaging by looking at a snapshot of the number of covered lives on a date or dates within each of the calendar quarters), or form 5500 method (for plans required to file a 5500, average the participant count as of the first day and last day of the plan year as reported on the 5500). For issuers, the calculation includes the actual count method, snapshot method, and two other methods.
The PCOR fee must be paid and reported to the IRS using IRS Form 720, found here, by July 31st of the calendar year immediately following the plan year or policy year ending on or after October 1, 2012 and before October 1, 2019. For example, a self-insured health plan with a plan year that ends between October 1, 2012 and December 31, 2012, must pay the first PCOR fee by filing Form 720 with the IRS by July 31, 2013. A health plan with a plan year that ends between January 1, 2013 and September 30, 2013, must pay the first PCOR fee by filing Form 720 with the IRS by July 31, 2014.
The plan sponsor (typically the employer) for self-insured health plans and the issuer for a fully-insured health policy will be the responsible party for paying the PCOR fee and filing the Form 720 by the July 31st deadline. Some health plans are exempt from paying the PCOR fee, including a plan that provides excepted benefits only (e.g. a limited-scope dental or vision plan) and an employee assistance program, disease management program or wellness program that does not provide significant benefits in the nature of medical care or treatment. There is no exemption for retiree health plans or health reimbursement arrangements that are linked to employers’ fully-insured medical plans, and, thus, those plans must pay the PCOR fee and file the IRS Form 720 by the July 31st deadline.