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Wednesday, 29 June 2016 05:40

Reminder: Key Compliance Deadline in July

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The Patient Centered Outcomes Research Institute (PCORI) fee is due July 31, 2016 for employers with any type of self-funded plan and/or a Health Reimbursement Arrangement. The fee helps fund unbiased research that evaluates the clinical effectiveness of medical treatments regardless of the profit potential. This fee is also known as the Comparative Effectiveness Research Fee, or CERF. 
The amount of the fee depends on your health plan’s effective date. The fee is $2.08 per covered life for employers with February 1 through October 1 effective dates, and $2.17 for employers with November 1, December 1, or January 1 effective dates. 
You need to calculate the average number of lives (employees and all dependents) over the plan year that ended in 2015. There are several allowable estimation methods for arriving at this average. Employers must submit payment for the PCORI fee along with the IRS Form 720 (Rev. April 2016). 

Employers/plan sponsors need to complete:
  • Company information and quarter ending "June 2016"
  • Part II, IRS No. 133
    • Column (a), row (b) - enter “Avg. number of lives covered for self-insured health plans”
    • Column (b) – see instructions ($2.08 or $2.17, depending on end of plan year)
    • Column (c) – enter total Fee (lives x $)
    • Tax column – enter the amount of the fee (from Column (c))
  • Part II, Line 2 – enter Total Tax (from Tax column on No. 133)
  • Part III, Line 3 – enter Total Tax (from Part II, Line 2)
  • Part III, Line 10 – enter Balance Due (from Part III, Line 3)
  • Signature section
  • Payment voucher with “2nd Quarter” checked, or file and pay electronically
    • If filing by mail, send the form, payment voucher, and check to: 
    • Department of the Treasury 
    • Internal Revenue Service 
    • Cincinnati, OH 45999-0009
To calculate the “Avg. number of lives covered”, use one of the three methods listed on pages 9 of the instructions:
Actual count method – The total number of lives covered (employees and their covered family members or only employees if HRA or FSA) on each day of the plan year, divided by the total number of days in the plan year.

Snapshot method
– At least one date during each month of each quarter. Dates in each quarter must be within 3 days of the dates for corresponding quarters.
Snapshot actual method – Total number of lives covered (employees and their covered family members or only employees if HRA or FSA) on each selected date, divided by the number of dates used.
Snapshot factor method – Number of participants with self-only coverage plus 2.35 times the number of participants with other than self-only coverage. (Do not use this method for HRA or FSA plans.)

Form 5500 method
– Use participant counts from the 5500 for that plan for that year.
Plan with only self-only coverage – Add the total number of participants at the beginning and end of the plan year, and divide by 2 to get the average for the year.
Plan with self-only and dependent coverage – Add the total number of participants at the beginning and end of the plan year. (Do not use this method for HRA or FSA plans.)
Read 1173 times Last modified on Wednesday, 26 October 2016 11:13
Kristen Russell

Kristen founded Fall River Employee Benefits as the culmination of her insurance industry career as an actuary, underwriting executive & consultant. As an Assistant Vice President at Great-West Healthcare (now part of CIGNA), she managed a $1 Billion block of health insurance. She also worked as a Senior Consultant at Reden & Anders, consulting to insurance companies and large employers throughout the country. Ms. Russell received a Bachelor of Science, Business Administration in Actuarial Science, is a member of the American Academy of Actuaries and achieved Fellowship in the Society of Actuaries through a rigorous nine-year series of exams.

Kristen grew up in Iowa but has lived in Colorado since 1993, currently living near our office in the Lower Highlands neighborhood near downtown Denver.  She enjoys bicycling, hiking, traveling and has a special passion for non-profit volunteering. She is married to an incredibly talented photojournalist, has two adult stepdaughters and an adorable Border Collie/Lab mix named Chaco.