If your health insurance plan or policy year ended after Sept. 30, 2012 and prior to July 31, 2013, you owe a Patient-Centered Outcomes Research (PCOR) Trust Fund Fee for 2013. And if you haven’t paid it yet, you’re past due.
President Obama’s healthcare reform law mandates that for plan and policy years ending on and after Oct. 1, 2012 through Sept. 30, 2019, all employer health plans must pay an annual fee to finance research conducted by the Patient-Center Outcomes Research Institute, a nonprofit corporation, on the clinical effectiveness of medical treatments, procedures and drugs.
Plan sponsors and insurers, who are responsible for paying the fee, must file the new IRS Form 720 along with their payment by July 31 of the year following the last day of the plan or policy year.
That means the first of these fees, for plan years that ended within the dates listed above, were due July 31, 2013. And new fees will come due every July 31 through 2020.
The IRS has issued Q&As surrounding these fees, stating they must be paid by plan sponsors of self-insured plans and insurers of fully-insured plans. It’s likely insurers will pass the fees along to employers in the form of increased premiums.
How much will it cost you?
Here’s how to determine how much your fee is:
Both self-insured plan sponsors and insurers must pay a fee determined by the average number of covered lives during a plan or policy year multiplied by the “applicable dollar amount for the year.”
The applicable dollar amount for the year is:
- $1 for plan or policy years ending on or after Oct. 1, 2012 and on or before Sept. 30, 2013
- $2 for plan or policy years ending on or after Oct. 1, 2013 and on or before Sept. 30, 2014, and
- an amount adjusted for inflation for plan years beginning on or after Oct. 1, 2014 and on or before Sept. 30, 2019.
When calculating your plan’s covered lives, you must include any spouses or dependent children your policy covers.
Example: If an employee has a family plan that covers his spouse and two children, that counts as four covered lives.
In addition, any individuals (and their beneficiaries) covered under COBRA also count as covered lives.
Which plans are exempt?
As with many federal laws, there are exceptions to Obamacare’s PCOR fee rule.
The PCOR fee doesn’t apply to government programs like Medicare, Medicaid, CHIP and any federal law that provides medical care to members of the “Armed Forces, veterans and members of Indian tribes.”
Also, plan sponsors and insurers of plans that provide only “excepted benefits,” such as plans that offer benefits limited to vision or dental benefits, and most flexible spending arrangements aren’t subject to the PCOR fee.
And plans that are limited to EAP benefits, disease management programs or wellness programs are exempt from the fee — as long as they don’t provide significant medical benefits.
This article previously appeared on our sister website, HRBenefitsAlert.com.