As noted in a prior article, “Cadillac, Other Key ACA Taxes Repealed,” on December 20, 2019, President Trump signed legislation into law to fund the government through September 2020 and repeal components of the Affordable Care Act (ACA), namely the Cadillac tax, medical devices excise tax, and health insurance providers (HIP) Fee.
In addition, the legislation also reinstates the Patient-Centered Outcomes Research Institute (PCORI) fee for the 2020 – 2029 fiscal plan years. The PCORI fee is a fee on health insurance issuers and plan sponsors of applicable self-insured health plans that is used to help fund the PCORI’s research to assist patients, and those who care for them, in making better-informed decisions about their healthcare.
Employers must be mindful of this change as the responsibility of paying this fee may fall on them if they offer a self-funded Medical plan. If an employer offers a fully-insured medical plan, then it is the insurance provider’s responsibility to address the PCORI fee.
The PCORI fee is calculated by multiplying the average number of participants covered, this includes spouses, dependent children, and any other eligible dependent, under your plan by the designated fee for that reporting year. For 2019, reporting the PCORI fee is $2.45. Furthermore, the fee is due to the IRS by July 31, 2020 for reporting from the 2019 plan year.
The ACA Compliance Bulletin provides an overview of the extension of the PCORI fee and important next steps for which employers should know. Additionally, you can find more history on the PCORI fee, how it is calculated, and who it applies to on the IRS website.
Contact your Cowden representative for more information on this or other compliance issues.