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It’s PCORI Return Filing Time Again

Under the ACA, the Patient-Centered Outcomes Research Institute (PCORI) was established.  The funding mechanism for PCORI was a fee on group health plans, including employer-contributed health care flexible spending accounts (FSAs) and Health Reimbursement Arrangements (HRAs).  An IRS Form 720 is required to be filed each year by July 31st (August 1, 2016 this year due to July 31st being on a weekend).

Who is Required to File and Pay

All employers sponsoring a self-funded group health plan, including an employer-contributed health care FSA and/or HRA must file an IRS Form 720 (instructions).  When filing the form and paying the PCORI fee, be sure to show a filing for the second quarter of the year, ignoring the first, third, and fourth quarters.

Fee Amount

The amount of the fee is determined by the last day of the plan year.  If the last day of the plan year was between October 2, 2014 and October 1, 2015, then the fee is $2.08 per covered individual.  If the last day of the plan year was between October 2, 2015 and October 1, 2016, then the fee is $2.17 per covered individual.  A covered individual means you’re counting belly buttons.  That is, you would count every employee, spouse, and child who is eligible for benefits under the plan.  There are two exceptions to this “belly button” rule.  The first is that if the employer sponsors a fully insured group health plan (for which the insurance carrier is filing and paying the PCORI fee) and that same employer also sponsors an employer-funded health care FSA and/or an HRA, you only count the employee in filing the report and paying the fee.  If the employer sponsors a self-funded group health plan, then the employer needs to file the form and pay the PCORI fee only on the number of belly buttons in the group health plan, and not for the employer-funded health care FSA and/or HRA.

In any event, be sure to file the return and pay the fees on time. There are penalties for late filings and for not filing at all.

Posted on June 10, 2016 by Gary B. Kushner, SPHR, CBP, President and CEO

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