A new fee imposed by the Affordable Care Act will be required for some insurance companies and employers starting on July 31, 2013. The Patient-Centered Outcomes Research Institute (PCORI) will be the main beneficiary of the revenue produced by the fee in order to fund their medical research program.
One example of PCORI’s projects includes research on controlling asthma in minority populations. Another will forge a partnership with the National Institute on Aging and National Institutes of Health in order to prevent injuries and falls in the elderly sector, among other endeavors.
The motivation behind this fee is to help medical professionals, as well as patients, make informed healthcare choices therefore reducing overall health care costs. Although not many people are aware of this fee, there will be penalties for ignoring it.
Not all employers must pay this fee. It will be assessed for insurance companies offering specific health plans, and employers who sponsor self funded plans, including HRA’s and flexible spending agreements. To determine if your insurance arrangement will be subject to the PCORI fee, click here and scroll down to the chart.
The good news for business owners is that the fee is fairly negligible. For policy years ending after September 30, 2012 and before October 1, 2013, take the number of people covered over the plan for the policy year (including former employees) and multiply by $1. For later years, the fee will increase to $2 per person covered on the plan to adjust for inflation. The fee will be assessed until October 1, 2019.
Check with your tax professional regarding filing tax form 720 and paying this little known fee.