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Despite Other ACA Tax Delays, PCORI Fee Remains Due July 31st

In its spending bill earlier this year, Congress approved delays to many Affordable Care Act (ACA) taxes and fees, including the “Cadillac” tax, health insurance tax, and medical device tax.

In addition to these taxes, the ACA imposes a fee on health insurance issuers and plan sponsors of self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). The PCORI fee, has not been delayed and is calculated based on the average number of lives covered under the policy or plan.

PCORI fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return). These fees are due each year by July 31 of the year following the last day of the plan year. The IRS instructions for filing form 720 include information on reporting and paying the PCORI fees.

Issuers and plan sponsors are required to report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans. That number is then multiplied by the applicable rate for that tax year, as follows:

Plan Year Ending

Amount Per Covered Life

Due Date

January 2017 – September 2017 $2.26 July 31, 2018
October 2017 – December 2017 $2.39 July 31, 2018
January 2018 – September 2018 $2.39 July 31, 2019

To determine the average number of covered lives, the plan sponsor of a self-insured health plan may use one of the following methods:

Actual Count Method

Add the totals of lives covered for each day of the plan year and divide that total by the total number of days in the plan year.

Snapshot Method

Use the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and divide that total by the number of dates on which a count was made.

Form 5500 Method

Use the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan.

Despite the delay of many other ACA taxes, ensure your organization meets the July 31 PCORI fee deadline to remain compliant and avoid penalties. For any questions related to the requirements or the deadline, reach out to your OneDigital consultant.

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