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Important Deadlines Approaching: Form 720 (PCORI) and Form 5500 filings

HitesmanLaw, PAClient AlertsJuly 28, 2021

Patient-Centered Outcomes Research Institute (“PCORI”) Fees
Many plan sponsors of self-insured health plans are required to pay PCORI fees by August 2, 2021. Specifically, the fees must be paid by this date for any plan year ending in 2020.

Important: Identify what plans are subject to the requirement and whether the plan is self-insured or fully-insured.  The insurance carrier is responsible for fully insured plans.  The plan sponsor (typically the employer) is responsible for self-insured plans.

What self-insured plans?

  • Major medical coverage
  • Certain health reimbursement arrangements (HRAs)
  • Individual coverage health reimbursement arrangements (ICHRAs)

See the chart on the IRS website regarding the application of PCORI fees to common types of health coverage or arrangements:  https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangements

Form 720 for Self-Insured Plan: The plan sponsor must file Form 720 and pay the required PCORI fee directly to the Internal Revenue Service (IRS). Third-party administrator (TPAs) cannot pay the fee on behalf of a plan. The Form 720 is available here: https://www.irs.gov/pub/irs-pdf/f720.pdf. Instructions for the form are available here:  https://www.irs.gov/instructions/i720.

Form 720 for Fully Insured Plan: The issuer of a “specified health insurance policy” must file Form 720 and pay the required PCORI fee directly to the IRS. Consequently, the insurance carrier files the PCORI fee.

Amount of PCORI Fee: The PCORI fee is equal to $2.66 per covered life for each plan or policy year ending on or after October 1, 2020, and before October 1, 2021.  Note, this amount is an increase from the $2.54 per covered life for the prior period.

In general, a self-insured plan must use one of three ways to determine the number of covered lives for purposes of PCORI fees:  (1) the actual count method, (2) the snapshot method, or (3) the Form 5500 method.  It is important to note, COBRA qualified beneficiaries, retirees, and former employees must all be included as covered lives.  However, for HRAs and ICHRAs, covered lives means the number of participants with an account.

***

Form 5500 Deadline Fast Approaching
In general, for plans subject to ERISA, Form 5500 filings are due seven months from the last day of the plan year. Note: Certain small plans are exempt from the filing requirement.

For a calendar year plan, the Form 5500 for the 2020 plan year is due on July 31, 2021 (because July 31, 2021, is on a Saturday, the Form 5500 is the following business day, which is August 2, 2021), unless an extension is requested.  If you need assistance with Form 5500 preparation and/or filing an extension, please contact us.

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Previous post EBIA Webinar 06/10/2021: Administrative Services Agreements for Group Health Plans Next post EBIA Webinar 08/26/2021 Learning the Ropes: An Introduction to ERISA Compliance for Group Health Plans

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About HitesmanLaw

As a leader in employee benefits law, Darcy Hitesman founded HitesmanLaw in order to help public and private employers, insurers and third-party administrators nationwide stay informed and minimize the risk of non-compliance issues.

HitesmanLaw provides a wealth of legal experience to their clients in the areas of ERISA, COBRA, HIPAA, Health Care Reform, welfare plans, cafeteria plans, HRAs, and VEBAs.

Client Alerts

  • EBIA Webinar 05/04/2022: Cafeteria Plan Election Changes: Who, What, Why, and When?
  • Attention! Great opportunity to brush up on cafeteria plan rules
  • EBIA Webinar 03/10/2022 – Learning the Ropes: An Introduction to Cafeteria Plan Design and Administration
  • ACA ANNUAL FILING REQUIREMENTS – Attention Employers that Sponsor an ICHRA!

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