Sponsors of self-insured health plans are notified that on June 3, 2013, the Internal Revenue Service (IRS) posted an updated Form 720 and accompanying instructions on its website. The new Form 720 (with a revision date of April 2013), along with related payment voucher Form 720-V, should be used to report and remit the "PCORI fee" to the IRS (see Part II, lines marked "IRS No. 133" on the second page of the Form). Although the Form 720 is designed for quarterly payments of certain excise taxes, the PCORI fee is paid only annually.
As we reported in the April 15, 2013, edition of the Benefits Broadcast article entitled "New Affordable Care Act Fees Impact Group Health Plans in 2013 and 2014," the "PCORI fee" or the "Section 4376 fee" is intended to partially fund the Patient-Centered Outcomes Research Institute founded as a result of the Affordable Care Act. The PCORI fee is applicable to plan years ending on or after October 1, 2012, and extends through plan years ending before October 1, 2019. The fee must be paid no later than July 31 of the year following the last day of the plan year. Therefore, the first round of PCORI fees are due for 2012 calendar year self-insured plans and certain fiscal year plans by July 31, 2013.
As a reminder, the PCORI fee for the first year (for plan years ending on or after October 1, 2012, and before October 1, 2013) is equal to $1.00 multiplied by the average number of covered lives in the group health plan. The PCORI fee for the second year will increase to $2.00 times the average number of covered lives in the group health plan and is indexed for increases in national health expenditures for the following years. Additionally, plan sponsors of self-insured health plans must act soon to make arrangements to complete and file the Form and pay the annual PCORI fees to the IRS, as the PCORI regulations directly prohibit using "third-party reporting" arrangements with respect to the Form 720. Plan sponsors are also advised that the fee must be paid by the plan sponsor and generally cannot be paid by the plan or from plan assets.