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The Affordable Care Act stipulates that issuers of the designated health insurance policies and the plan sponsors of the relevant self-insured health policy must pay the Patient-Centered Outcomes Research Institute (PCORI) fee.  Furthermore, in order to prevent any fines in the future, you must pay close attention to your taxes if you are the one required to pay the PCORI cost.  A very easy method for paying and reporting the PCORI fee has been made available by the IRS.  Let's examine how to carry it out methodically.

 

 

Both the employers who finance self-insured health plans, such as HRAs (Health Reimbursement Arrangements), and the insurers of fully insured health plans are required to pay a PCORI charge.  With a self-funded plan, the employer is in charge of filing the tax return and providing it to the IRS.  On the other side, the insurance company will often handle insured policies.  A business that offers both kinds, meanwhile, could have to submit separate applications for each.

 

 

IRS Form 720 must be used if you want to submit your PCORI charge.  This is a quarterly return for federal excise taxes.  The PCORI fee is a yearly obligation, often due by July 31 for plans ending in the previous calendar year, even if the form is filed four times a year for different purposes.  Furthermore, the charge amount is displayed in Part II of Form 720 under the heading "Patient-Centered Outcomes Research Fee," and the provider is responsible for determining the fee.  The number of lives insured and the plan year influence the cost.

 

 

Three IRS-approved techniques are available to plan sponsors for determining the average number of insured lives:

The Real Count Method

Form 5500 Method: Snapshot Method

Since each approach has its own set of guidelines, you must select the one that best fits your documentation and plan management.  Simply multiply the average number of lives by the applicable fee rate for that year (the IRS releases new rates every year) after this is done.

 

 

Once you have completed Form 720, use the Electronic Federal Tax Payment System (EFTPS) to make your payment.  Remember to pay and file by the due date.  Penalties and interest may be assessed for late submissions.  Make sure your form is postmarked by the deadline if you plan to mail it.  To be audit-ready, you must maintain accurate records of your computations and payment confirmation.

 

 

To ensure that your company stays in compliance with federal standards, you must be aware of the PCORI fee reporting procedures.  Fill out the appropriate form, compute the cost precisely, and submit it on time whether you are doing it alone or with the help of a third-party administrator.  Every year, get news and answers to your questions by bookmarking the IRS PCORI fee page or contacting a tax expert.