As many of you may know recently the Internal Revenue Service (IRS) issued final regulations on the Comparative Effectiveness Research (CER) Fee which will be imposed on health insurers and plans sponsor of group health plans.
The Affordable Care Act (ACA) created a new Patient-Centered Outcomes Research Institute (PCORI) to conduct research evaluating and comparing health outcomes and assess the clinical effectiveness, risks and benefits of medical treatments. The PCORI will be funded in part through the CER fees.
Calendar-year plans will pay the CER fee for the 2012 through 2018 plan years (for a total of seven years). Insurers pay the fee for insured plans and plan sponsors pay the fee for self-insured plans. The first payments are due for some plans on July 31, 2013. The annual fee begins at $1 per covered life and will increase in future years.
Timing of Reporting and Payment
The annual CER fee initially becomes payable the first plan year ending on or after October 1, 2012. The fees will be paid annually by July 31 of the calendar year immediately following the last day of the plan year. An employer must report and pay the fee via IRS Form 720 by July 31 of each year. The filing will cover the plan year that ended during the preceding calendar year. In other words, by July 31, 2013, a client with a calendar year plan will need to file the Form 720 and pay the fee assessment for the plan year ending December 31, 2012.
|Overview of the Comparative Effectiveness Research Fee|
|What||• Annual fee on insured and self-insured health plans|
|Who pays||• Insurers pay for insured plans – fee is built into rates
• Plan Sponsors pay for self-insured plans – insurers and/or TPA are not allowed to pay or calculate the fee
|When||• Applies for plan years ending on or after October 1, 2012
• First payments are due by July 31, 2013
• Fee continues through 2019
|How much||•Initial annual fee begins at $1 per covered life, including dependents
• In subsequent years, the multiplier increases to $2 times the average number of covered lives but this number will be reviewed annually and could change
|How paid||Tax is self-reported on Excise Tax Form 720|
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