OUR THOUGHTS ON:

Trust Fund Fees for Self-Insured Plans Are Due July 31

Tax

By John Kohler

Did you know that there are fees due on health insurance policies and self-insured plans used to help fund the Patient-Centered Outcomes Research Institute (PCORI) Trust Fund?  These fees were established as part of the Patient Protection and Affordable Care Act (PPACA) and are effective for policy or plan years ending after September 30, 2012.  The fee, paid by the issuer of the health insurance policy, is set at $2 per number of covered lives under the insurance policy for policy or plan years ending after September 30, 2013 and before October 1, 2014 ($1 for policy and plan years ending before September 30, 2013) and will increase based on inflation in national health expenditures.  The fees are paid with the issuer's 2nd Quarter Federal Excise Tax Return (Form 720) due July 31 of the year following the last day of the policy year or plan year.  Issuers and plan sponsors that do not have a regular federal excise tax liability are only required to file the 2nd quarter form 720 to report the PCORI fee. 

Internal Revenue Code §4376 imposes this fee on the plan sponsor of an applicable self-insured health plan.  The Internal Revenue Service has defined the "plan sponsor" as the employer in the case of a plan established and maintained by a single employer, or the employee organization in the case of a plan established or maintained by an employee organization.  In a multiple-employer plan, the "plan sponsor" is defined as the association, committee, joint board of trustees, or other similar group of representatives of the parties that establishes or maintains the plan.  The fee is also imposed on Health Reimbursement Arrangements (HRA) and Flexible Spending Accounts (FSA), although some FSA policies can be exempted out of the fee.  The fee is not imposed on plans that are established only to provide vision and dental benefits.

If you have any questions about the Affordable Care Act or the PCORI fee, please contact one of the Schneider Downs tax professionals

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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.

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© 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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