Form 720 Revised for PCOR Fee Reporting Under Health Care Reform

As previously discussed, health care reform established a new Patient-Centered Outcomes Research Institute (“PCORI”) to study patient-centered outcomes, funded by a Patient-Centered Outcomes Research (“PCOR”) fee.  This fee must be reported on Form 720 annually for seven years, beginning with the plan year ending on or after October 1, 2012.  The fee is due by July 31 of the calendar year following the last day of each plan year, which means that for calendar-year plans, the first PCOR fee (for the 2012 plan year) must be reported and paid by July 31, 2013 (the end of next month).

Earlier this week, the IRS finally published on its website a revised Form 720 (Quarterly Federal Excise Tax Return), which plan sponsors of self-funded plans must now use to report the Patient-Centered Outcomes Research (“PCOR”) fee mandated under health care reform.  Here are a few things to note:

  •  1)      Revised Form 720: The new entries for the PCOR fee are found on page 2 as “IRS No. 133,” the first entries for Part II of Form 720.  Plan sponsors will need to fill out the “average number of lives covered” for the 2012 plan year for “applicable self-insured health plans” and then multiply that number by $1.00, since that is the rate for 2012 (please note that for future years, the rate will be $2 per average covered life).
  • 2)      Instructions to Revised Form 720:  The PCOR fee is discussed generally on page 1 under the “What’s New” section and in more detail on pages 8-9.  The “Reporting and paying the fee” section on page 9 confirms that the PCOR fee only needs to be reported and paid once each year (on a Form 720 for the 2nd quarter):

“If you file Form 720 only to report the fee, do not file Form 720 for the 1st, 3rd, or 4th quarters of the year. If you file Form 720 to report quarterly excise tax liability for the 1st, 3rd, or 4th quarter of the year (for example, filers reporting the foreign insurance tax (IRS No. 30)), do not make an entry on the line for IRS No. 133 on those filings.”

Today’s post was contributed by Cynthia Y. Lee

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