Tax Alert

Initial Obamacare Fees for Health Insurers and Self-Insured Plans Due July 31, 2013

(June 21, 2013)


Under the Affordable Care Act, health insurance issuers and sponsors of self-insured health plans are required to pay a fee of $1 per life covered for the first year ending between Oct. 1, 2012, and Sept. 30, 2013 ($2 per life for each subsequent year ending before Sept. 30, 2019). The fee is collected to fund the Patient-Centered Outcomes Research Institute (PCORI).

For companies that maintain a fully insured health plan for their employees, the PCORI fee will be paid by the health insurance issuer. Companies that maintain plans that self-insure some or all of their employees’ health insurance coverage generally are responsible for paying the fee. Companies with two or more arrangements to provide accident and health coverage may treat the arrangements as a single plan when calculating the PCORI fee.

Plans subject to the PCORI fee include accident, health, major medical coverage, retiree-only coverage, Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage, health reimbursement arrangements (HRAs), and flexible spending accounts (FSAs).

The fee is due annually on July 31 of the calendar year following the close of the plan year (July 31, 2013, for calendar year 2012). The fee is payable with Form 720, “Quarterly Federal Excise Tax Return.” Payment via Electronic Federal Tax Payment System (EFTPS) is not required if you are filing Form 720 solely to pay the PCORI fee.

The number of lives covered under an accident or health plan is determined by computing any of the following:

  • Average lives covered each day during the plan year
  • Average lives covered on one or more consistent dates from each quarter of the plan year
  • Covered lives on Form 5500, “Annual Return/Report of Employee Benefit Plan,” or Form 5500-SF (must be filed prior to PCORI fee due date)


For the first plan year ending after Oct. 1, 2012, the regulations permit taxpayers to compute average lives covered using dates beginning on or after May 14, 2012.

Self-insured employers should consult with their plan administrators for help calculating their number of covered lives.


 

For More Information
Dave Horvath
630.586.5117
david.horvath@crowehorwath.com

David Holets
317.706.2683
david.holets@crowehorwath.com

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Dave Horvath

Managing Director