In April, the Internal Revenue Service issued proposed regulations on collecting fees from health insurance issuers and self-insured group health plan sponsors for establishing the Patient-Centered Outcomes Research Trust Fund, as required under the Patient Protection and Affordable Care Act. The fund provides funding for a new Patient-Centered Outcomes Research Institute. PPACA requires the Institute to conduct research to evaluate and compare health outcomes and the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs and other strategies or items that treat, manage, diagnose or prevent illness or injury.
According to the proposed regulations, the fees will be applicable for policy and plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. For calendar year policies and plans, the fees will apply to the 2012 through 2018 policy or plan years.
For plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2013, the applicable dollar amount is $1 for each covered life. For plan years ending on or after Oct. 1, 2013, and before Oct. 1, 2014, the applicable dollar amount is $2 for each covered life. For any plan year ending on or after Oct. 1, 2014, the dollar amount is increased according to data in the most recent edition of the National Health Expenditures released by the Department of Health and Human Services. The proposed regulations include methods for issuers and plan sponsors to determine the average number of covered lives, which depend upon whether the plan is fully insured or self-insured.
Who pays the fees
Generally, for fully insured plans, the health insurance issuer underwriting the policy is responsible for paying the fees. For self-insured plans, the plan sponsor is responsible for paying the fees.
Under PPACA, fees for the fund apply to "specified health insurance policies" and "applicable self-insured health plans." The fees apply regardless of grandfathered status.
A "specified health insurance policy" is any accident or health insurance policy (including a group health plan policy) issued with respect to individuals residing in the U.S. The definition of "specified health insurance policy" excludes insurance policies providing coverage for excepted benefits, such as dental-only and vision-only policies.
An "applicable self-insured health plan" is any plan providing accident or health coverage if any portion of the coverage is provided other than through an insurance policy, and the plan is established or maintained:
* By one or more employers for the benefit of their employees or former employees.
* By one or more employee organizations for the benefit of their members or former members.
* Jointly by one or more employers and one or more employee organizations for the benefit of employees or former employees,
* By a voluntary employees' beneficiary association.
* By any organization described in section 501(c)(6) of the Internal Revenue Code.
* By a multiple employer welfare arrangement, a rural electric cooperative, or a rural telephone cooperative association.
The definition of "applicable self-insured health plan" includes retiree-only plans. In addition, health flexible spending accounts and health reimbursement arrangements are subject to the fee requirements, although plan sponsors may only have to pay a single fee for certain integrated arrangements.
Insurance carriers and self-insured group health plan sponsors should prepare to pay the fees applicable to the 2012 policy or plan year; these will be due by July 31, 2013.
Contributing Editor Kate Bongiovanni is an associate in the tax section of Smith, Gambrell & Russell, LLP. She practices in employee benefits law and can be reached at firstname.lastname@example.org.
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