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For Employers Sponsoring Self-Insured Health Plans the PCORI Fees Are Due Before July 31, 2017
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The Affordable Care Act imposes a fee on fully insured health insurance policies and plan sponsors of applicable self-insured health plans. All employers who were plan sponsors of self-insured health plans (Cigna Level Funding) with plan start dates from Feb. 1, 2015 to Jan. 1, 2016 are required to file IRS Form 720 and pay the fee. The fee for self-insured plans is the responsibility of the plan sponsor (employer), is required to be reported only once a year on the second quarter Form 720 and paid by its due date, July 31. The fee is based on the average number of lives covered under the policy or plan.
Calculating the Fee
The tax is payable in 2017 for plan year start or renewal dates beginning on or after Feb. 1, 2015 and ending on or before Jan. 1, 2016. For plan years ending on or after Feb. 1, 2015 and on or before October 1, 2015, the fee for an employer sponsoring an applicable self-insured plan is
$2.17 ($2.26 for plan years beginning on or after November 1, 2015 and on or before January 1, 2016)
multiplied by the average number of lives covered under the plan.
Fee due July 31, 2017 for Plans with Start Dates
PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE
Feb. 1, 2015 - Oct. 1, 2015 $2.17
Nov. 1, 2015 - Jan. 1, 2016 $2.26
You should have received a report from Cigna providing you the average number of lives covered under the plan with an explanation of the permissible methods for determining the average number of lives covered under a plan. Additional information can be located, as well as examples, and explanations at IRS guidance.
Reporting and Paying the Fee
File the second quarter
Form 720 annually to report and pay the fee no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Issuers and plan sponsors who are required to pay the fee but are not required to report any other liabilities on a Form 720 will be required to file a Form 720 only once a year. They will not be required to file a Form 720 for the first, third or fourth quarters of the year. Deposits are not required for this fee, so issuers and plans sponsors are not required to pay the fee using EFTPS.
Please see the instructions for Form 720 on how to fill out the form and calculate the fee. If for any reason you need to make corrections after filing your annual Form 720 for PCORI, write "Amended PCORI" at the top of the second filing.
The payment, if paid through the Electronic Federal Tax Payment System, should be applied to the second quarter (in EFTPS, select Q2 for the Quarter under Tax Period on the "Business Tax Payment" page).
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Please contact us with any questions.
George Knox, CLU, ChFC
Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a 'covered opinion' or other written tax advice and should not be relied upon for any purpose other than its intended purpose.
The information provided herein is intended solely for the use of our clients and members. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher. Kindly read our Terms of Use and respect our Copyright.
© 2015 HR 360, Inc. - All rights reserved
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