Tax News Highlights: Fees for Health Insurers and Self-Insured Plans Due July 31

| 4/23/2015

Under the Affordable Care Act, health insurance issuers and sponsors of self-insured health plans are required to pay a fee of $2 per life covered. The fee has increased to $2.08 for plan years ending between Oct. 1, 2014, and before Sept. 30, 2015. The fee is collected to fund the Patient-Centered Outcomes Research Institute (PCORI).

For companies that maintain a fully insured health plan for their employees, the PCORI fee will be paid by the health insurance issuer. Companies that self-insure some or all of their employees’ health insurance coverage generally are responsible for paying the fee. Companies with two or more arrangements to provide accident and health coverage may treat the arrangements as a single plan when calculating the PCORI fee.

Plans subject to the PCORI fee include accident, health, major medical coverage, retiree-only coverage, Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage, health reimbursement arrangements (HRAs), and flexible spending accounts (FSAs).

The fee is due annually on July 31 of the calendar year following the close of the plan year (July 31, 2015, for calendar year 2014). The fee is payable with Form 720, “Quarterly Federal Excise Tax Return.” Payment via the electronic federal tax payment system (EFTPS) is not required when Form 720 is filed solely to pay the PCORI fee.

The number of lives covered under a plan is determined by computing any of the following:

  • Average lives covered each day during the plan year
  • Average lives covered on one or more consistent dates from each quarter of the plan year
  • Covered lives on Form 5500, “Annual Return/Report of Employee Benefit Plan,” or Form 5500-SF (must be filed prior to PCORI fee due date)

Self-insured employers should consult with their plan administrators for help calculating the number of covered lives that apply for them.

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