Blog Details

 

Understanding and adhering to healthcare standards has therefore proven to be a challenging undertaking for self-funded firms who provide health plans.  The employer providing that specific health plan is responsible for paying the PCORI fee, which is one of these requirements that is assessed annually.  The Act creates these massive fee marketplaces, and the funds are utilized for research to teach physicians and people how to make health care decisions for every ailment.  Even if the word "PCORI fee" is straightforward, there are always a lot of doubts about who should be in charge of determining it and making the payment.  Therefore, it is imperative to clarify the role of a third-party administrator (TPA) in the process.

 

 

Health plans that are fully or self-insured are subject to the PCORI fee.  The health insurance carrier is responsible for paying the fee, which is typically covered by the premiums for fully insured policies.  However, the key participant in this situation is the committee of self-insured (including level-funded) plans, and since they bear the majority of the costs, it is imperative that the employer collect and remit this amount on a regular basis.  Additionally, research is conducted using the funds obtained, allowing for the comparison and evaluation of various medical treatments, potentially leading to best practices for health care reforms and results.

 

 

While Third-Party Administrators (TPAs) are essential in managing many aspects of self-insured health plans, it is important to know their limitations with regard to the PCORI charge.  It is recognized by the IRS that TPAs are unable to pay the PCORI charge or file Form 720 (Quarterly Federal Excise Tax Return) on behalf of a plan sponsor.  is fact, this means that even if your TPA provides the sponsor with the necessary covered life data, the employer is ultimately is charge of preparing and submitting Form 720 and the associated payment.

 

 

Form 720 is essentially the explanation for the employer's direct accountability for their fund's tax return.  It is the federal excise tax return, not merely a report.  Therefore, the IRS requires that the return be filed by the company that is responsible for the tax, which is the plan sponsor.  In providing data (such as the average number of covered lives), the TPA may assist; nevertheless, they are not permitted to act as your agent when it comes to completing taxes and paying specific taxes.  Getting the assistance of their accountants or tax consultants, who can guarantee precise and timely compliance, is the ideal approach for employers to be certain of it.

 

 

It is recommended that self-insured organizations set July 31st (or the following business day if it falls on a weekend or holiday) as the last day of each subsequent calendar year in order to maintain compliance and avoid potential penalties.  It is worthwhile to review the following thorough yet concise checklist:

Determine the end of the year for your plan:  This qualifies for the appropriate fee rate.

Count the number of members who are covered:  Your TPA can obtain this data for you, frequently by employing several computation techniques (Form 5500 procedure, Snapshot, or Actual Count).

Determine a fee:  The PCORI fee rate for your plan year is simply multiplied by the average number of covered lives.

Submit IRS Form 720.  The PCORI charge is particularly entered in Part II, IRS No. 133.

Transmit the money:  Form 720 and the fee must be sent together.  If it is your only method of paying the specified fee (the only excise tax), electronic payment via EFTPS is one option, but it is not required.

Save the documents:  Keep a backup copy of your filed Form 720 and the payment receipt.

Self-funded companies can thus successfully complete the PCORI fee obligations and maintain compliance with federal legislation by making sure they are aware of the precise duties and responsibilities.