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IRS Addresses Health Plan Fees Imposed to Fund PCORI

Stuart M. Langbein

Stuart M. Langbein,

Washington, D.C.

18 April 2012
On April 12, 2012, the IRS released a proposed rule regarding the fee imposed on health plans by the Patient Protection and Affordable Care Act (PPACA) to fund the Patient-Centered Outcomes Research Institute (PCORI).  Under PPACA, this fee must be equal to the amount of covered lives in a policy year, and is to go into effect starting on or after October 2012 and end before October 1, 2019.  The fees will be $1 per covered life in fiscal year 2013, $2 per covered life in fiscal year 2014, and will increase in subsequent years based on the percentage increase of per capita health spending. 
IRS Addresses Health Plan Fees Imposed to Fund PCORI

Under the proposed rule, insurers are given four options in calculating the number of covered lives under the proposed rule: the actual count method, the snapshot method, the member months method, or the state form method.  The proposed rule also sets forth certain exemptions from this fee.  For example, ex-patriot, stop-loss, reinsurance plan, and most wellness and disease management programs, as well as plans that provide mainly excepted benefits (e.g., accident, disability, and worker’s compensation) would be exempted from the fee.   In addition, the IRS clarifies that employers offering flexible spending and health savings accounts along with major medical coverage will not be double charged for the fee.  

The IRS will hold a public hearing to discuss the proposed rules on August 8, 2012.  Stakeholders who wish to submit comments are asked to do so by July 30, 2012.

Stuart M. Langbein

Stuart M. Langbein,

Washington, D.C.

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