Tag Archives: affordable care act

PCORI Fees Due July 31

PCORIWhat is the PCORI fee?

The Affordable Care Act imposes a Patient Centered Outcomes Research Institute (“PCORI”) fee on health plans in order to support clinical effectiveness research.  The PCORI fee applies to plan years ending on or after October 1, 2012 and before October 1, 2019.

When is it due?

The fee is due by July 31 of the calendar year following the close of the plan year.  For plan years ending in 2013, this means that the fee is due by July 31, 2014.

How do I calculate and report the fee?

The PCORI fees are required to be reported annually using Form 720, Quarterly Federal Excise Tax Return.  According to the IRS, the PCORI fee is tax deductible as a business expense.  The fee itself is assessed based upon the number of employees, spouses, and dependents that are covered by the plan.  The fee is $1 per covered life for plan years ending before October 1, 2013 and $2 per covered life thereafter.

Which plans are subject to the fee?

Most health plans including major medical plans, prescription drug plans, and retiree only plans, are all subject to the PCORI fee.  The fee applies to all types of employers including tax exempt organizations and governmental entities.

Who is responsible for the PCORI fee?

For insured plans, the insurance company is responsible for filing Form 720 and paying the PCORI fee.  Therefore, employers whose group health plans are fully insured generally will not have any additional obligations with respect to the PCORI fee.  In contrast, employers sponsoring self-funded health plans must file Form 720 and pay the corresponding PCORI fee.

For questions about the PCORI fee or assistance in calculating the fee, contact a member of the McGrath North Employee Benefits practice group.

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Premium Increases Expected for 11 Million Americans

premium increaseThe Affordable Care Act requires adjusted community rating for plan years beginning on or after January 1, 2014.  Specifically, premium rates in the individual and small group market for fully-insured, non-grandfathered health plans may vary based only upon the following characteristics:

  • Individual or family enrollment.
  • Geographic area – premium rates can vary by the area of the country.
  • Age – premium rates can be higher for older individuals than that for younger individuals, but the premiums for these populations cannot exceed a 3:1 ratio for adults.
  • Tobacco use – premium rates can be higher for smokers, but the ratio cannot exceed 1.5:1.

Additionally, the Affordable Care Act requires the guaranteed issuance of health insurance coverage (subject to certain exceptions). This means that insurers generally must accept all individuals applying for coverage in that market and must renew their coverage going forward.  This does not apply to grandfathered health insurance coverage.

The above rating requirements will impact premiums paid by individuals and families working for small employers who offer fully insured group health plans. Specifically, a recent report from the government estimates that the premium rates for roughly 11 million people will increase whereas about 6 million people will benefit from lower premiums. 

To read the full study, click here.

For additional information on premium rating and how it may affect your business, contact a member of the McGrath North Employee Benefits practice group.

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