As you may be aware the PCORI fee which was passed as part of HealthCare Reform is due to be paid by your health plan on or before 7/31/14.
The Patient-Centered Outcomes Research Trust Fund Fee will be used to pay for the new Patient- Centered Outcomes Research Institute referred to a PCORI. The described purpose for this fee is, “assist…making informed decisions by advancing the quality and relevance of evidenced-based medicine”.
The amount of this fee (tax) is $1 per year for each covered member (employee and dependent) this year. This excise tax is due on the end of the second quarter or 7/31 and is filed using IRS Form 720, Quarterly Federal Excise Tax Return.
IRC Sections 4375 and 4376 impose the fee on the issuer of a specified health insurance policy and sponsors of applicable self-insured plans for each policy year ending on or after Oct. 1, 2012, and before Oct. 1, 2019.
There are 3 methods to calculate the average number of covered lives. Here is a brief description of each:
1. Actual Count Method counts each and every different covered member (employee, spouse and child) that was covered under your plan even if they were only covered a few days. This is calculated by looking at census information for each day of the plan year.
2. Snapshot Method is an average taken by counting each and every covered member (employee spouse and child) covered on the first day of each calendar quarter divided by 4.
3. 5500 Method is the total number of participants at the beginning of the plan year as reported on the 5500 (line 5) added to the number of participants at the end of the plan year as reported on the 5500 (line 6d). This method is only available if your plan files a 5500 and only if you have filed one for the period of time that covers the 2013 plan year.
Once you choose a method, this is the method you must consistently apply in future years.
If you already file a Quarterly 720 Form you will need to complete Line 133 only on the second quarterly filing due on July 31st. If the PCORI fee is the only reason to file a Form 720 then it only needs to be filed once a year at the end of the second quarter and it appears that it can still be done the old fashion way via USPS.
If you need any assistance in filing please contact Holbrook & Manter. Our professionals are ready to assist you in meeting this compliance obligation.