Friday, April 20, 2012

IRS proposes regulations on comparative effectiveness research fees of ACA

EBIA reports that the IRS has issued proposed regulations regarding the fees imposed by health care reform on health insurers and on sponsors of self-insured health plans to support clinical effectiveness research by the new Patient-Centered Outcomes Research Institute (sometimes referred to as “CER” or “PCOR” fees).

The fees apply only to policy or plan years ending after October 1, 2012 and before October 1, 2019 (i.e., for seven full plan years). For years ending before October 1, 2013, the fee is $1.00 times the average number of covered lives under the policy or plan. For later years, the fee rate increases to $2.00, subject to adjustment based on changes in per capita National Health Expenditures as reported by the Treasury.

Key points from the regulations include:
  • PCOR fees apply to any accident or health insurance policy issued with respect to U.S. residents
  • Plans are not subject to fees if they cover only excepted benefits (also excluded are EAPs, disease-management, and wellness programs)
  • Under the proposed regulations, plan sponsors of fully insured plans are not responsible for the fees; only plan insurers are
  • PCOR fees are to be reported and paid once a year, even though they are reported on IRS Form 720 (Quarterly Federal Excise Tax Return)
  • Reports and payments for plan years that end in a calendar year are due by July 31 of the following year
Self-funded plans may use any of three methods to determine the average number of lives covered:
  • Actual count method - based on lives covered on each day during the plan year
  • Form 5500 method - based on number of participants at beginning and end of year as reported on the 5500
  • Snapshot method - based on lives covered on one day during each quarter of the plan year
For more infomation, please view the Federal Register announcement.

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