October 11, 2011

Research Fee Assessed To Health Plans

As you may remember, PPACA contained a provision for a tax of $2 per average number of insured lives to be paid quarterly by plan sponsors to fund a comparative effectiveness research program. The comparative effectiveness research program provides information on the strengths and weaknesses of various medical interventions. The goal of the research program is to provide clinicians and patients with objective information to evaluate the effectiveness of particular treatment procedures to improve the health care system and provide better and more efficient care.

The IRS recently published preliminary guidance regarding implementation of this fee. In particular, the tax is applicable to fully insured and self-funded plans. The total covered lives include employees, spouses and dependents. This tax provision goes into effect plan years beginning after October 1, 2011. The first plan years that have to comply with this provision are those beginning November 1, 2011. This tax must be paid by plan sponsors. This provision is pending further guidance from the IRS and there are several items needing clarification regarding the implementation of the tax, including, timing of payments and calculation of average number of covered lives.

Employers will need to plan prudently and plan to pay the fee for plan years beginning after October 1, 2011. Since this is a tax, it is necessary to contact your CPA for guidelines on how to comply with the necessary filings. Regulations are still pending and the details regarding implementation are still being negotiated. Unified will update you on any new developments.

Unified is available to assist plan sponsors in the determination of average number of covered lives needed to complete the filings.

Return to News Archive