Further Consolidated Appropriations Act of 2020 and ACA Taxes

On Friday night, December 20, President Trump signed two spending bills that keep the federal government funded until September 20, 2020. 

One of the bills was called the Further Consolidated Appropriations Act of 2020. This omnibus bill includes many provisions beyond keeping the federal government running.  For example, it extends the Work Opportunity Tax Credit (WOTC); the federal tax credit for employers that provide paid family and medical leave; and several immigration-related programs, including E-Verify.  The bill also provides several improvements in 401(k) rules.

However, this bill also addresses the Affordable Care Act in these important ways:

  1. The Cadillac tax is fully repealed and not kicked down the road beyond January 2022.
  2. The excise tax on medical devices is repealed effective December 31, 2019.
  3. The excise task in health insurers (some call this the ACA Market Share Fee or the Health Insurer Fee) is repealed effective January 1, 2021. 
  4. The PCORI fee, which was supposed to expire for plan years ending after September 30, 2019, has been extended for another 10 years.  It will continue to have an inflation-adjusted mechanism.

Since the PCORI fee has not been a “big ticket” item, its continuance will likely not require self-funded employers to revise their 2020 health budgets or rates.

We will continue to keep you advised as we learn more about the impact of these spending measures.

Questions? Please contact the Findley consultant you regularly work with or Bruce Davis at Bruce.Davis@findley.com or 419.327.4133.

© 2019 Findley. All Rights Reserved.

Posted December 23, 2019

Affordable Care Act PCORI Fee Due July 31

As a reminder, the ACA developed the Patient-Centered Outcomes Research Institute (PCORI), whose mandate is to improve the quality and relevance of evidence available to help patients, clinicians, caregivers, employers, insurers, and policy makers make informed health decisions. In order to fund the comparative effectiveness research, the ACA imposes an annual fee, which is paid to the IRS. This year the due date is July 31, 2019.

Don't miss the PCORI fee deadline on July 31, 2019

If a plan is fully insured, then the health insurer is responsible for paying the fee. For self-insured plans, the plan sponsor (generally the employer) is responsible for paying the PCORI fee.

For self-insured health plans, the fee is calculated using the average number of total lives covered by the plan (both employees and dependents). The requirement for calculating the total fee is to use one of the following three calculation methods:

  • Actual count method
  • Snapshot method
  • Form 5500 method

Plan Sponsors should review all three methods to determine the lowest amount to be paid. The amount to pay depends on the plan year end as outlined below:

  • Plan years ended 1/1/2018 – 9/30/2018:
    $2.39 per covered life (including spouses and children)
  • Plan years ended 10/1/2018 – 12/31/2018: $2.45 per covered life (including spouses and children)

The PCORI fee is set to expire for plan years that end before October 1, 2019, therefore this will be the final PCORI filing for calendar year-end plans.

The PCORI fee is filed using IRS Form 720 (https://www.irs.gov/pub/irs-pdf/i720.pdf). The payment voucher (720-V) should indicate that the tax period for the fee is the “second quarter” to avoid the IRS’s software system marking this as a tardy filing notice.

For more information, contact Dave Barchet at 216.875.1914, Dave.Barchet@findley.com or John Lucas at 615.665.5329, John.Lucas@findley.com or the Findley consultant with whom you normally work with.

Published June 7, 2019

© 2019 Findley. All Rights Reserved.

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IRS Issues Annual Increase to PCORI Fee

As part of the Affordable Care Act, the fee to fund the Patient-Centered Outcomes Research Institute (PCORI) has been in effect since 2012, and by now, plan sponsors and insurers are very familiar with it. The fee itself was imposed as part of Sections 4375 and 4376 of the Internal Revenue Code, and is scheduled to be in effect for plan years ending after September 30, 2012 and before October 1, 2019. The amount of the PCORI fee is equal to the average number of lives covered during the plan year multiplied by the applicable dollar amount for the year. Of note, the applicable dollar amount is indexed each year.

The IRS has recently released Notice 2018-85; stating that for plan years ending on or after October 1, 2018, and before October 1, 2019, the fee will be increased from $2.39 to $2.45 per covered member. This will be the used to calculate the amount payable in July 2019 using the IRS Form 720. View the IRS notice directly by clicking here. Please also note that for calendar year plans, the 2018 plan year is the last year for which PCORI fees will apply given the sunset of the fees.

Posted November 8, 2018

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