United States

Employers with self-insured health plans owe PCOR fee by July 31, 2017

TAX BLOG


Despite on-going efforts in Congress to repeal and replace the Affordable Care Act, employers with self-insured health plans are still required to pay the annual patient-centered outcomes research (PCOR) fee for plan years ending in 2016 by July 31, 2017. The fee applies to all types of employers, including tax-exempt organizations and governmental entities. Both large employers and small employers (those with fewer than 50 full-time employees) are subject to the fee.

The PCOR fee applies to most self-insured health plans, including major medical, prescription drug and retiree-only plans, regardless of the number of plan participants. A self-insured health plan is one in which the accident and health benefits are paid by the employer and not through an insurance policy. Special rules apply to Health Reimbursement Accounts (HRAs) and Health Flexible Spending Accounts (FSAs).

The PCOR fee is based on the average number of employees, spouses and dependents covered by the plan and is up to $2.26 per covered person. Employers can choose among three alternative methods for determining the average number of covered persons in a plan.

To evaluate liability for PCOR fees, employers should identify all of their plans that provide medical benefits and determine if each plan is insured or self-insured. If self-insured and subject to the fee, the number of covered persons will need to be determined in order to calculate the fee. PCOR fees are reported on Form 720, Quarterly Federal Excise Tax Return, which must be filed each year by July 31. 

Related: Patient-centered outcomes research fee on health plans

Jill Harris

Senior Director

Jill helps businesses with planning and compliance for employee welfare and retirement plans. She can be reached at jill.harris@rsmus.com.

Areas of focus: Washington National TaxAffordable Care Act