IRS Issues New Form 720 for Reporting ACA Research Fee

June 2013

The IRS has issued a revised Form 720 and corresponding instructions, to allow for the reporting and payment of patient-centered outcomes research (PCOR) fees contained in the Affordable Care Act (ACA).

Background

The ACA imposes fees on certain health insurers and self-insured health plan sponsors for policy or plan years ending on or after October 1, 2012. The fee contributes to an effort to help fund clinical effectiveness research. The annual fee deadline is July 31 of the calendar year following the end of the employer’s plan year. The first deadline is July 31, 2013, for the reporting and payment of fees for policy and plan years ending between October 1 and December 31, 2012.

The insurance carrier will file fees for all fully insured plans, but employer/plan sponsors must file and pay the fee for self-funded health plans, including Health Reimbursement Arrangements (HRAs)

New Form 720

The new Form 720 and instructions can be found at www.irs.gov/form720. The instructions briefly explain the alternative methods for calculating the average number of covered lives, which include special transition rules for first-year reporting. Final regulations regarding payment of the fee can also be found at http://www.irs.gov/irb/2012-52_IRB/ar11.html.

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