new-fee-under-the-affordable-care-act-dueOn July 31, 2013 you can expect the first of several fees that are enacted by the Affordable Care Act on self-insured group health plans and/or issuers of insured health policies providing accident and health coverage.

The Affordable Care Act establishes the creation of the Patient-Centered Outcomes Research Institute to assist patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing clinical effectiveness research. The Institue is funded by a Trust Fund, which is funded in part by user fees commonly called the “PCORI fee” paid by issuers of certain health insurance policies and sponsors of certain self-insured health plans.

On December 6, 2012 the IRS and Treasury Department have issued final regulations on the user fees to be assessed for plan years ending after September 30, 2012 (including calendar year plans). The 2012 first year fee is $1.00 per covered life, and must be reported and paid by July 31, 2013. The fee increases to $2.00 for plan years ending on or after October 1, 2013 and before October 1, 2014. Self-insured plans sponsored by employers should file and pay the fee as an excise tax on IRS Form 720 – Quarterly Federal Excise Tax Return. The IRS is currently working on revising this form, and should be available shortly.

Plans subject to the fee include:

  • Medical plans
  • Prescription drug plans
  • Self-insured dental or vision plans, if provided without a separate election or premium charge
  • Health reimbursement arrangements (HRAs)
  • Retiree-only health plans (with some exceptions)

Plans exempt from the fee include:

  • Separately insured dental or vision plans
  • Self-insured dental or vision plans, if subject to separate coverage eelctions and employee contributions
  • Health savings accounts (HSAs)
  • Most flexible spending accounts (FSAs)
  • Employee assistance programs (EAPs), wellness programs, and disease management programs that do not provide “signifcant benefits in the nature of medical care or treatment”

Please contact us at or (908) 782-7900 if you have any questions about this filing requirement or paying the excise tax.