Fees for Health Plans and Insurance Carriers Under PPACA

On April 17, 2012, the Internal Revenue Service (IRS) issued proposed regulations regarding fees that will be assessed to health insurers and health plans under PPACA to support the Affordable Care Act (known as PPACA or ACA) requirement to fund research at the Patient-Centered Outcomes Research Institute. The Patient-Centered Outcomes Research Institute is an entity created to assist individuals in making informed health care decisions about treatment, medicines, and services among other areas in health care.

The fees will be imposed on both fully-insured and self-funded health plans. Under self-funded plans, the plan sponsor is the responsible entity for paying the fee and, under fully-insured plans, the insurance issuer is responsible for paying the fee. The regulations are “proposed” regulations and are not deemed final at this time although it is expected the regulations will be finalized with very few changes.

The regulations state that fees will be imposed at $1.00 per “covered life” for the 2012 plan year increasing to $2.00 per covered life in the 2013 plan year. After that, there will be annual increases, although the regulations indicate the fee is to end in the year 2019. The plan sponsor will pay the fee by filing IRS Form 720 no later than July 31st of the calendar year immediately following the year for which the fee is being imposed. Accordingly, the first 720 filing for health plans would be July 31, 2013 assuming the proposed regulations become final.
Exempted health plans are Health Savings Accounts, disease management programs, EAPs, certain exempt governmental programs (such as Medicare), Tribal programs and wellness programs. HRAs and Flex plans may be exempted if they are deemed to be “excepted benefits” under HIPAA but are otherwise included. The proposed regulations also set forth the methods plans may use to calculate the fees. The regulation can be found at: https://www.federalregister.gov/articles/2012/04/17/2012-9173/fees-on-health-insurance-policies-and-self-insured-plans-for-the-patient-centered-outcomes-research