June 6, 2017
This Compliance Alert is a reminder to sponsors of group health plans that fees to fund the Patient-Centered Outcomes Research Institute (PCORI) must be paid to the IRS by July 31, 2017, using IRS Form 720, a Quarterly Excise Tax Form. This fee is assessed annually on group health plans through 2019. Fees for all plans ending in 2016 are due by July 31, 2017.
Health insurance carriers will pay the PCORI fees for employers with fully insured group health plans. Employers with a fully insured group health plan and an HRA or a health FSA that is not a HIPAA excepted benefit should prepare to file Form 720 and pay PCORI fees for the HRA or health FSA.
Your HCW consultant and client manager have worked with HCW’s compliance team to determine which clients had non-excepted health FSAs with plan years ending in 2016. HCW will assist those clients in calculating the amount of the PCORI fee or will work with your FSA vendor to ensure the calculation is provided to you.
Employers with self-funded medical plans are also responsible for filing the Form 720 and paying the PCORI fees. Third-party administrators are prohibited from filing the Form 720 on an employer’s behalf.
The amount of the PCORI fee is $2.17 per covered life for plans ending between January 1, 2016, and September 30, 2016. The PCORI fee increases to $2.26 per covered life for plans ending after October 1, 2016 (i.e. November 1 and December 1, 2016, and January 1, 2017, renewal dates).
For more information about the PCORI fee, please see our white paper, Healthcare Reform Fees and Taxes.
EMPLOYER CALL TO ACTION
If your medical plan is self-funded you will receive a communication from your client manager by June 30, 2017, containing the amount of the PCORI fee for your self-funded medical plan that ended in 2016. A separate PCORI fee is not required for an HRA or non-excepted FSA if the HRA or non-excepted FSA was on the same plan year as the medical plan. You will need to file and pay the PCORI Fee using IRS Form 720 by July 31, 2017.
If your medical plan is fully insured your carrier will pay the PCORI fee. There is no further action required on your part.
If your medical plan is fully insured and you offer an HRA or non-excepted FSA you will receive a communication from your client manager by June 30, 2017, containing the amount of the PCORI fee for your HRA or non-excepted FSA for the plan year ending in 2016. A separate PCORI fee is owed for the HRA or non-excepted FSA even though the health insurance carrier is paying the PCORI fee for the medical plan. You will need to file and pay the PCORI Fee using IRS Form 720 by July 31, 2017.
Communications from your client manager will also contain a link to the current IRS Form 720 and associated instructions. Clients may use the amount provided in the communication to complete Line 133 in Part II of Form 720. HCW recommends each client consult with their accountant or tax advisor to confirm the appropriate PCORI fee amount and assist with the completion and filing of Form 720.
Clients of Hill, Chesson & Woody with an HRA or non-excepted FSA that is administered by ProBenefits should receive a communication from ProBenefits regarding the payment of PCORI fees by mid-June. You will not be receiving a separate communication from your HCW client manager. Please let your HCW client manager know if you did not receive a communication from ProBenefits.
Should you have any questions about this Compliance Alert, please contact your HCW consultant or client manager at (919) 403-1986.