OUR THOUGHTS ON:

Patient-Centered Outcomes Research Fee

ERISA

By Gerald Nappi

As part of the Patient Protection and Affordable Care Act (PPACA), a research fee will be imposed on both insured and self-funded health plans. These fees will be used to help fund the Patient-Centered Outcomes Research Institute, a nonprofit entity authorized by Congress, and charged with conducting research to provide information based on the best available evidence to help patients and health care providers make more informed decisions. The research is intended to provide patients with a better understanding of the prevention, care and treatment options available, as well as the science supporting said options.

In general, the fee is imposed on the issuer of specified health insurance policies and plan sponsors of self-funded health plans for policy and plan years ending on or after October 1, 2012. With regard to reimbursement-type plans, health reimbursement arrangements (HRA) will be subject to these fees. If an employer offers multiple self-funded plans in which both plans are maintained by the same plan sponsor with the same plan year, the number of individuals participating in both plans only needs to be counted once. The fee will be assessed on the insurer of the insured plan, while the plan sponsor of a self-funded plan will be required to pay the fee. The fee is calculated based on the average number of covered lives under the plan. The initial fee is $1.00 per covered life, and the fee will be $2.00 per covered life (indexed) for policy and plan years ending on or after October 1, 2013. For years ending on or after October 1, 2014, the fee will be increased based on the increases in the projected per capita amount of National Health Expenditures. This fee will cease to be assessed for policy and plan years ending after September 30, 2019. (i.e.: For a calendar year policy or plan year, this would be the 2018 policy or plan year.)

The fee is to be reported and paid once a year on the 2nd quarter Form 720, Quarterly Federal Excise Tax Return. The filing deadline for the return is July 31. Should you need assistance or guidance relative to this matter, please feel free to contact any member of the Employee Benefits Department.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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