October 15, 2014

Fee on Self-insured Health Plans -Patient-centered Outcomes Research Fee

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On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Fee on Self-insured Health Plans -Patient-centered Outcomes Research Fee

Section 4376 of the tax code imposes a fee equal to $2 multiplied by the average number of lives covered under the plan. The fee amount increases based on the percentage increase in the projected per capita amount of National Health Expenditures as determined by the Dept. of Health and Human Services. The amount for policy years and plan years that end on or after October 1, 2014, and before October 1, 2015, is $2.08. The plan sponsor is liable for the fee. The fees are required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st. Fees are based on the average number of lives covered under the policy or plan.

Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year.

Actual count method.
Snapshot method.
Form 5500 method.

This excise tax (fee) is due 2013 through 2019.

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Fee on Self-insured Health Plans -Patient-centered Outcomes Research Fee