IRS Releases Updated Form 720 Used For PCORI Fee Payments

IRS Releases Updated Form 720 Used For PCORI Fee Payments

As we recently reported, on June 8, 2020, the IRS released the applicable PCORI fee for plan years ending between October 1, 2019 and September 30, 2020.  As we indicated in that alert, an updated Form 720 had not yet been released and, therefore, employers were advised to wait to file their PCORI fees until the IRS released the updated form.  Late last week, the IRS issued the updated Form 720, which is the April 2020 Revised form. Employers who sponsored a self-funded health plan, including an HRA, with a plan year that ended in 2019 should use this updated Form 720 to pay the PCORI fee by the July 31, 2020 deadline.

As a reminder:

  • The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan.
  • The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. In general, health FSAs are not subject to the PCORI fee.
  • Plans that ended between January 1, 2019 and September 30, 2019 use Form 720 to pay their PCORI fee of $2.45 per covered life.
  • Plans that ended between October 1, 2019 and December 31, 2019, use Form 720 to pay their PCORI fee of $2.54 per covered life.
By |June 18th, 2020|Compliance, Employee Benefits, Health Care Reform, IRS, Medical|Comments Off on IRS Releases Updated Form 720 Used For PCORI Fee Payments

PCORI Fees Due By July 31, 2020

Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2020 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI).  As background, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury.  Under the ACA, most employer sponsors and insurers were required to pay PCORI fees until 2019, as it only applied to plan years ending on or before September 30, 2019.  However, the PCORI fee was extended to plan years ending on or before September 30, 2029 as part of the Further Consolidated Appropriations Act, 2020.

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.  This year, employers will pay the fee for plan years ending in 2019.

For plan years that ended between January 1, 2019 and September 30, 2019, the fee is $2.45 per covered life and is due by July 31, 2020.

Since the extension of the PCORI fee deadline in December, issuers and sponsors of self-funded plans have been anxiously awaiting information from the IRS concerning the applicable PCORI fee for plans with plan years ending between October 1, 2019 and before October 1, 2020.  On June 8, 2020, the IRS Issued Notice 2020-44, which sets the applicable PCORI fee for these plans at $2.54 per covered life.  As of June 8, the IRS has not released the second quarter Form […]

By |June 10th, 2020|Employee Benefits, Health Care Reform, IRS, Legislation, Medical|Comments Off on PCORI Fees Due By July 31, 2020

IRS Releases 2021 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

In Rev. Proc. 2020-32, the IRS released the inflation adjusted amounts for 2020 relevant to HSAs and high deductible health plans (HDHPs).  The table below summarizes those adjustments and other applicable limits.

  2021 2020 Change
Annual HSA Contribution Limit

(employer and employee)

Self-only: $3,600 Family: $7,200 Self-only: $3,550 Family: $7,100 Self-only: +$50 Family: +$100
HSA catch-up contributions

(age 55 or older)

$1,000 $1,000 No change
Minimum Annual HDHP Deductible Self-only: $1,400 Family: $2,800 Self-only: $1,400 Family: $2,800 No change
Maximum Out-of-Pocket for HDHP

(deductibles, co-payment & other amounts except premiums)

Self-only: $7,000 Family: $14,000 Self-only: $6,900 Family: $13,800 Self-only: +$100 Family: +$200

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2021.

  2021 2020 Change
ACA Maximum Out-of-Pocket Self-only: $8,550

Family: $17,100

Self-only: $8,150

Family: $16,300

Self-only: +$400

Family: +$800

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage, if the family out-of-pocket limit is above $8,550 (2021 plan years) or $8,150 (2020 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans).  A one-year extension of transition relief was announced on January 31, extending the transition relief to policy years beginning on or before October 1, 2021, provided that all policies end by December 31, 2022. (This transition relief has been extended each year since the initial announcement on November 14, 2013.)

Next Steps for Employers

As employers prepare for the 2021 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

  • HDHPs cannot have an embedded […]
By |May 29th, 2020|Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, IRS, Legislation, Medical|Comments Off on IRS Releases 2021 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits