Plan sponsors of self-funded plans, including some Health Reimbursement Arrangements (HRA) and Flexible Spending Accounts (FSA), are reminded that the Affordable Care Act’s (ACA) Patient Centered Outcomes Research Institute Fee (PCORI) is due for calendar year plans by July 31st. In December of 2019, the PCORI fee was resurrected for another ten years (see the prior Leavitt Group article.)
Self-funded plan sponsors are responsible for submitting Form 720 and any corresponding fees. The Internal Revenue Service (IRS) publishes the due dates and applicable rates here. The fee for the 2021 plan year is $2.66 per covered life for plan years ending between January 1, 2021 and September 30, 2021. For plan years ending between October 1, 2021 and December 31, 2021, the PCORI fee is $2.79.
What if the fee is late or was not remitted?
Late fees apply for late filing and/or payment, but the IRS may waive these if the plan sponsor has reasonable cause and the failure was not due to willful neglect. However, the IRS will not waive fees if the failure was due to inadvertent error. See Part II (Pages 8-9) of the IRS instructions. Corrections to a previously-filed Form 720 filing may be made using Form 720X. (See Q/A 16 on the IRS PCORI Fee webpage cited above.)
Action May be Required
Self-funded plan sponsors are obligated to make this payment, not their carrier or Third Party Administrator (TPA). Consult your legal and tax professional for calculations and to ensure compliance with all applicable law for your specific circumstances. For additional details on calculating covered lives and remitting payment, see the Leavitt Group article.
The Leavitt Group is not a law firm. This information is intended as educational only and may be oversimplified for ease of consumption. Be sure to consult with your own legal, tax or financial professional to ensure compliance with all applicable law.