It’s PCORI Return Filing Time Again (2019 Edition)
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 certain employer-contributed health care flexible spending accounts (employer FSAs) and Health Reimbursement Arrangements (HRAs). An IRS Form 720 is required to be filed each year by July 31st.
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.
The amount of the fee is determined by the last day of the plan year that fell during 2018. If the last day of the plan year was on or between January 1, 2018 and September 30, 2018, then the fee is $2.39 per covered individual. If the last day of the plan year was on or between October 1, 2018 and December 31, 2018, then the fee is $2.45 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.
The applicable rate is increased each year for inflation. However, the program ends in 2019 and PCORI fees will not apply for plan years ending after September 30, 2019.
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.