News Flash June 6 2013 IRS Form for PCORI Fee Now Available
News Flash: June 6, 2013 – IRS Form for PCORI Fee Now AvailableThe IRS has revised its Form 720 to allow for filing and payment of the Patient-CenteredOutcomes Research Institute (PCORI) fee required under the health care reform law. (The fee isalso sometimes called the Comparative Effectiveness Research or CER fee.) The first filingdeadline for the fee is July 31, 2013, and many employers that sponsor self-insured health planshave been waiting for the revised Form 720 to be issued so that they can prepare their filings.(Health insurers are responsible for calculating and paying the PCORI fee for fully insuredcoverage, so employers that do not provide any self-insured coverage need not file.)For details on the calculation and applicability of the PCORI fee, see Willis Human CapitalPractice Alert, February 2013, “IRS Issues Final Regulations For Comparative EffectivenessResearch Fees.”BackgroundThe PCORI was created under the health care reform law to promote research that evaluates andcompares the health outcomes obtained from, and the clinical effectiveness, risks and benefits of,medical treatments, services, procedures, drugs and other strategies that treat, manage, diagnose orprevent illness or injury. The funding source for the PCORI is a trust financed by PCORI fees paidby health insurers and sponsors of self-insured health plans. Regulations finalized late last yearconfirm that the fee is to be reported and paid annually using Form 720, “Quarterly Federal ExciseTax Return.” Although it is called a “quarterly” return, Form 720 for PCORI fee purposes is onlyfiled once a year.For an employer sponsoring a self-insured health plan, the first PCORI fee applies to the first planyear ending on or after October 1, 2012, and the deadline for filing and payment of the fee is July31 of the calendar year immediately following the last day of the plan year. This means that anemployer sponsoring a self-insured calendar year plan (with a plan year ending on December 31,2012) must report and pay its first PCORI fee by July 31, 2013. In contrast, for a self-insured planwith a plan year ending on January 31, 2013, the deadline is July 31, 2014.For plan years ending before October 1, 2013 the PCORI fee is $1 multiplied by the averagenumber of lives covered under the plan. For plan years with later ending dates, the fee increases to$2 multiplied by the average number of lives covered under the plan. That $2 amount may beincrease for inflation with respect to plan years ending on or after October 1, 2014.IRS Form 720Form 720 and instructions on how to complete and file it are posted on the IRS website. The IRShas also posted questions and answers about the PCORI fee and a chart that outlines which types
of plans are subject to the PCORI fee. Although the IRS encourages electronic filing of Form 720,it may also be filed via hard copy. Filing electronically requires a plan sponsor to submit the formthrough an approved transmitter software developer. Additional information on electronic filingcan be found here.This information is not intended to represent legal or tax advice and has been prepared solely for informationalpurposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.