By WK Editorial Staff
The fee, which was set to expire, has been extended through 2029.
In Notice 2020-44, the IRS has provided the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee imposed by Code Secs. 4375 and 4376 on the issuer of a specified health insurance policy for policy years and plan years that end after October 1, 2019, and before October 1, 2020. The fee helps fund the Patient-Centered Outcomes Research Institute (PCORI).
The applicable dollar amount that must be used to calculate the fee imposed for policy years and plan years that end on or after October 1, 2019, and before October 1, 2020, is $2.54.
Transition relief. Notice 2020-44 also provides transition relief for calculating the average number of covered lives as part of calculating the applicable fees for policy years and plan years that end on or after October 1, 2019, and before October 1, 2020. The Patient Protection and Affordable Care Act (ACA) created the PCORI and the fee was set to expire at the end of 2019. However, the Further Consolidated Appropriations Act, 2020, extended this fee through 2029. Since the PCORI fee was set to expire in 2019, self-insured health plans may not have anticipated the need to identify the number of covered lives for this period.
Therefore, self-insured plan sponsors may use any reasonable method for calculating the average number of covered lives. If the plan sponsor uses a reasonable method to calculate covered lives, the IRS requires the plan to apply the method consistently for the duration of the plan year. In addition to the reasonable method available under the transition relief, self-insured plan sponsors are permitted to continue using the three methods specified in Sec. 4376: the actual count method, the snapshot method, and the Form 5500 method.
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