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Fully insured carriers and most self-insured health plan sponsors must pay annual Patient-Centered Outcomes Research Institute (PCORI) fees to the IRS. They are also required to report the same on Form 720 as an excise tax. The payment is due July 31, 2022.
The PCORI Fee was to cease for plan years ending after September 30, 2019. However, the PCORI Fee regulation has been extended for another 10 years through September 30, 2029, due to the Further Consolidated Appropriations Act of 2020. (Internal Revenue Code Sections 4375 and 4376)
A Little Background
On December 6, 2012, the IRS issued final regulations on the temporary annual payment of the PCORI Fees by fully insured carriers and self-insured plan sponsors of applicable health plans, including those covering retirees and COBRA individuals. (Internal Revenue Code Sections 4375 and 4376). Since July 2013, the fully insured carriers and most plan sponsors of self-insured health plans have been responsible for paying the annual fees directly to the IRS.
Defining Applicable Health Plans and Excepted Benefits:
How PCORI Fees Apply to Different Health Plans
HRAs & Self-Insured Plans – A Health Reimbursement Arrangement (HRAs) that is integrated with a self-insured health plan is considered part of a single plan, which avoids duplication of fees.
HRAs & Fully Insured Plans – When the HRA is integrated with a fully insured medical plan, the employer plan sponsor submits payment for an employee who is enrolled in the HRA. The insurer (carrier) submits payments for the same employee who is enrolled in the associated insured plan. Employees only (not dependents) are counted towards calculating the PCORI fees for the HRA that’s integrated with a fully insured medical plan.
FSAs – A Health Flexible Spending Account (FSA) is not subject to the PCORI Fee if it meets the requirements of an excepted benefit under Code §9832(c). A health FSA is considered an excepted benefit if:
PCORI Fee Amounts (IRS Notice 2022-4):
Final regulations do not include penalty information for failure to report or pay the PCORI fee.
But since this fee is considered an excise tax that’s reported on IRS Form 720, any related penalty for failure to file a return or pay a tax would seem to apply.
How Covered Lives Are Counted In Self-Funded Health Plans:
Important to Remember About PCORI Fees:
The link below will take you directly to the IRS site to get the revised form along with instructions on how to complete it. On the form the information will be recorded in Part II on Page 2; IRS No. 133 – Applicable self-insured health plans (c) or (d) based on when the plan year ended. Please note the IRS has not yet updated the form with the new dates and the new amounts for the reporting requirement due by July 31, 2022.
IRS Form 720
Instructions for IRS Form 720
The PCORI Fee information is reported on Page 2; Part II; IRS No. 133 Line; Applicable self-insured health plans and:
Applicable Dollar Amounts for Plan Years Ending
A Reminder About Who Does the Reporting
How Amwins Connect Administrators Can Help
The above request can be sent to your self-funded account manager or Kathy Thompson.
If you have a Self-Funded Plan administered through Amwins Connect Administrators, Inc. please contact your Self-Funded Account Manager.
If you have an HRA administered through Amwins Connect Administrators, Inc. and there are questions, we ask that the broker please contact Kathy Thompson.