To (PCORI) Fee…or Not to Fee. THAT is the Question!

One of the Affordable Care Act‘s (ACA) 18 new “Taxes, Elimination of Deductions, and New Fees”     (click on – something called the Patient -Centered Outcomes Research Institute fee (or PCORI for short).  The fee is applicable to virtually any health insurance plan (both fully insured and self-funded), specifically the following:
·         Fully insured medical plans (individual and group)
·         Self funded group health plans (including some HRA and FSA plans)
·         Retiree only medical plans
·         COBRA health insurance coverage
·         Limited or Mini-Medical plans
·         Federal/State/Local governmental health plans offered by an employer
PCORI fees are NOT applicable to the following types of plans:
·         Long term/Nursing home plans offered separately
·         Stand alone dental and vision plans (e.g., either can be elected without electing a health plan)
·         Accident only
·         Disability Income
·         Disease specific (e.g., cancel, critical illness)
·         Medicare supplement
·         Workers compensation
·         Stop loss/Reinsurance
·         International medical
·         On-site medical clinics
·         Government plans such as Medicare, Medicaid, and CHIP
·         Health Savings Accounts (HSA)
·         Employee Assistance Programs (EAP)
·         Wellness programs
·         Disease management programs
The fee applies to plan years beginning on or after 10/2/2011, and is payable by INSURERS for fully insured plans, and EMPLOYERS on self funded plans, and is due by July 31, 2013.  The initial annual fee is $1 per plan participant (or “belly button”) including dependents, increasing to $2 for plan years on or after 10/2/2012.  So for example a self funded plan providing coverage to 156 members would owe $156 for the plan ending in 2012, and $312 for the plan year ending in 2013 (assuming no change in enrollment). 
There are a variety of allowable methods available to self insured employers for calculating the PCORI fee (e.g., actual count, snapshot, and form 5500 methods).  After having recently assisted one particular employer with the calculation of their fee, I would advise consideration of the “form 5500” method initially, for ease and lowest potential total amount.
IMPORTANTLY: So if your plan is fully insured, THE INSURANCE COMPANY AND NOT THE EMPLOYER is obligated to calculate and file the fee.  If your plan is self insured (or partially self insured), THE EMPLOYER is responsible for calculating and remitting the fee on IRS form 720 by July 31, 2013.  For a more detailed overview of PCORI fees, click on –