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Final Regulations Released on PCORI Trust Fund Tax

The IRS has released its final rule on the Patient-Centered Outcomes Research Institute (PCORI) trust-fund tax.

Background on the tax and the proposed regulation released earlier this year is here.

The final regulation does not make significant changes to the proposed rule. It is mostly significant for it is confirmation of certain positions that health insurers and health-plan sponsors had sought relief on, including:

  • Retiree-Only Plans. The tax applies to retiree-only plans, even though those plans are generally exempt from the group-market reforms enacted as part of the Affordable Care Act.
  • COBRA Coverage. Individuals receiving COBRA coverage under a plan are counted as covered lives for purposes of the tax.
  • Integrated Insured and Self-Funded Coverage. The tax applies to both the insured and self-funded portions of a plan or arrangement, when the same individual is covered under both portions. For example, if a plan provides fully insured high-deductible coverage integrated with a self-funded HRA, the tax applies to both the insured portion and the self-funded HRA. However, if a plan includes an insured option and a self-funded option as alternatives (i.e., an individual may be covered under one or the other but not both), the tax may be calculated separated for each option under the plan, meaning individuals receiving only insured coverage do not have to be counted for purposes of calculating the tax on the self-funded coverage.
  • HRAs and Health FSAs. There is no blanket exclusion for HRAs or health FSAs. Many health FSAs will be exempt from the tax as "excepted benefits," but most HRAs will be subject to the tax, including those that are integrated with fully insured major-medical coverage.
  • Due Date. The tax must be reported (on Form 720) and paid by July 31 following the calendar year in which the plan year ends. The IRS declined to fully align the due date with the due date for filing Form 5500 for a calendar-year plan (which may be as late as October 15 after the end of the plan year). Thus, calendar-year plans may be required to report and pay the PCORI tax before their Form 5500 is completed.

The regulations apply for plan years ending on or after October 1, 2012 and before October 1, 2019. 


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Don Berner, the Labor Law, OSHA, & Immigration Law Guy
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Boyd Byers, the General Employment Law Guy
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Jason Lacey, the Employee Benefits Guy
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