Revised IRS Form 720 Now Available for Employers Sponsoring HRAs and Other Self-Insured Plans to Report and Pay PCORI Fees
First PCORI Fees Due by July 31, 2013
The IRS has revised Form 720, Quarterly Federal Excise Tax Return, for employers sponsoring certain self-insured health plans to report and pay new fees imposed under Health Care Reform to fund the Patient-Centered Outcomes Research Institute (PCORI). The fees, which must be reported annually on the second quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under a plan.
Affected Self-Insured Plans
PCORI fees are imposed on plan sponsors of applicable self-insured health plans for each plan year ending on or after October 1, 2012, and before October 1, 2019. An applicable self-insured health plan generally includes a health reimbursement arrangement (HRA), as well as a health flexible spending arrangement (FSA) that is not treated as an excepted benefit.
Calculating the Fee
The fee for an employer sponsoring an applicable self-insured plan is two dollars (one dollar for plan years ending before October 1, 2013) multiplied by the average number of lives covered under the plan. For plan years ending on or after October 1, 2014, the fee will increase based on increases in the projected per capita amount of National Health Expenditures.
Details on how to determine the average number of lives covered under a plan, as well as various examples, are included in the final regulations. For a plan year beginning before July 11, 2012, and ending on or after October 1, 2012, an employer is allowed to use any reasonable method to determine the average number of lives covered under the plan.
How to Report and Pay the Fee
Affected plan sponsors are required to report and pay the fee for a plan year no later than July 31st of the year following the last day of the plan year. The final regulations do not permit or include rules for third-party reporting or payment of the PCORI fee.
Fees are reported and paid using IRS Form 720. Deposits are not required for this fee, so employers do not need to use the Electronic Federal Tax Payment System. Form 720-V (scroll to page 7) is used for making a payment by check or money order with Form 720. According to the Instructions for Form 720, employers who file the form only to report PCORI fees are not required to file the form in other quarters, unless other fees or taxes must be reported.