Employee Benefits-IRS Announces Increase In PCOR Fees

In Notice 2017-61, the IRS announces an increase in PCOR Fees generally for years ending on or after October 1, 2017 and before October 1, 2018.  Here is what the Notice says.

PURPOSE

The Notice provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee (commonly called the “PCOR Fee”) imposed by §§ 4375 and 4376 of the Internal Revenue Code (the “Code”), for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018.

BACKGROUND

Section 4375 of the Code imposes the PCOR Fee on the issuer of a specified health insurance policy for each policy year ending after September 30, 2012, and before October 1, 2019.  Section 4376 of the Code imposes the PCOR Fee on the plan sponsor of an applicable self-insured health plan for each plan year ending after September 30, 2012, and before October 1, 2019.  This fee helps to fund the Patient-Centered Outcomes Research Trust Fund (“PCORTF”) and is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year.

Under §§ 4375(a) and 4376(a), the applicable dollar amount is $2 for policy and plan years ending on or after October 1, 2013, and before October 1, 2014.  Treas. Reg. §§ 46.4375-1(c)(4) and 46.4376-1(c)(3).  Under §§ 4375(d) and 4376(d) and Treas. Reg. §§ 46.4375-1(c)(4) and 46.4376- 1(c)(3), the applicable dollar amount increases for subsequent policy years and plan years based on a specified formula.

ADJUSTED APPLICABLE DOLLAR AMOUNT

The applicable dollar amount that must be used to calculate the PCOR Fee for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018, is $2.39.  The increase in this amount from the applicable dollar amount in effect for policy and plan years ending on or after October 1, 2016 and before October 1, 2017 is $.13.

EFFECTIVE DATE

The Notice is effective for policy years and plan years ending on or after October 1, 2017.