Patient-Centered Outcomes Research Institute (PCORI) Fee, Transitional Reinsurance Fee (TRF) and Health Insurance Providers (HIP) Fee
The IRS and the Department of Health and Human Services have issued final regulations that provide details on several fees that will be due as part of the Patient Protection and Affordable Care Act (PPACA). Self-funded plans will calculate and pay these fees directly. Insurers will calculate and pay the fees due on insured policies, although insured plans should expect these fees to be passed along.
Both the Patient-Centered Outcomes Research Institute (PCORI) fee and the Transitional Reinsurance Fee (TRF) are temporary and are based on covered lives – that is, both employees and retirees and their covered spouses and children generally must be counted. The basic methods a plan may use to count members are the same under the two fees (although a plan may use one method for one fee and a different method for the other fee if it prefers). However, because the PCORI fee is based on a plan year, the PCORI count looks at the entire plan year. (Note that although PCORI is based on the plan year, the reporting and fee due date is always July 31.) In contrast, the TRF is based on a calendar year, even for non-calendar year plans. TRF reporting of covered lives will be due Nov. 15.The majority of the fee will be due early in the next January, with the balance due in the following fourth quarter. To meet the Nov. 15 reporting date, for TRF purposes, covered lives will only be counted for the first nine months of the calendar year.
The PCORI fee is small – $1 or $2 dollars per covered person per year – and will be in effect from 2012 through 2019. It is designed to fund research into the most effective ways of treating various diseases. The federal TRF will be $63 per covered person for the 2014 calendar year. It is expected to be $44 per covered person for the 2015 calendar year and will reduce further in 2016. The TRF is scheduled to expire after 2016. (States have the right to charge their own, additional TRF but few are expected to add a state-level fee.) The TRF is designed to pay a portion of the cost for individuals with large claims.
The PCORI fee is reported on IRS form 720. The form for the TRF has not been released yet.
View a comparison of the TRF and PCORI fees
Health Insurance Providers Fee
The IRS has issued final regulations on the Health Insurance Providers (HIP) fee. This fee will be paid by insurers, although insured plans should expect these fees to be passed along. This fee does not apply to self-funded plans. The HIP fee is permanent. The total fee that will be paid by insurers on medical, dental, and vision coverage is $8 billion in 2014, $11.5 billion in 2015, $11.5 billion in 2016, $13.5 billion in 2017, $14.3 billion in 2018, and $14.3 billion indexed to medical inflation for later years. The insurer’s fee will be based on its size, so fees will vary among insurers; one estimate available through the Association of Health Insurance Plans predicts the fee will increase premiums by 1.9 to 2.3 percent in 2014.
Links to final regulations:
Patient-Centered Outcomes Research Fee
Transitional Reinsurance Fee
Health Insurance Providers Fee