Ellin & Tucker Offices

Affordable Care Act has numerous new regulations and fees

We wanted to remind you that the new excise tax that your organization may be subject to pay is due July 31, 2014.

The Patient Protection and Affordable Care Act (PPACA) created a special excise tax called the Patient-Centered Outcomes Research Institute (PCORI) fee to fund a research institute to study and provide advice on various health care issues. The PCORI fee is generally paid by your organization’s health insurance company; however, if your organization has a self-insured health plan, your organization is responsible for paying the PCORI fee. Also, if your organization has a health reimbursement arrangement (HRA), it will be subject to the PCORI fee, as well as your health insurance provider. If your organization offers a flex spending account (FSA), it may also be subject to the fee.

The PCORI fee is $1 per covered life for plan years ending after September 30, 2012 and on or before September 30, 2013, increases to $2 per covered life for plan years beginning after September 30, 2013, and may be adjusted for inflation for future plan years. Covered life includes employees’ spouses and dependents covered by the insurance plan. There is a special rule which only applies to HRAs and FSAs that allows organizations to only count its employees and not employees’ spouses and dependents covered by the HRA or FSA. The fee is paid with Form 720, Quarterly Federal Excise Tax Return, filed with the Internal Revenue Service, and due by July 31 each year until 2019. The current Form 720, which is due July 31, 2014, covers plan years ending after December 31, 2012 and on or before December 31, 2013.

If your organization offers health insurance, we suggest you contact your health insurance agent, health insurance provider, or third party administrator to determine if it is subject to this fee. If your organization has an HRA, your provider will probably provide the number of employee-covered lives, but your organization must file Form 720.

Please feel free to call if you would like more details concerning the PCORI fee or need any help completing Form 720 for your organization’s HRA.

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