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Tax & Bookkeeping

Tax Tip: Due JULY 31, 2013 NEW Affordable Care Act fee on certain employers and health insurance companies.

There is a nominal fee due for certain employers and health insurance companies as part of the new health care law. It is called the PCORI fee and it is due annually on July 31st beginning this year in 2013. The fee is not much but it does add to compliance burdens and the normal penalties for failure to file and failure to pay taxes. The fee which amounts to a $1 per insured person is tax deductible as an ordinary business expense. The fee primarily affects employers that self insure and health insurance companies.

Check out this chart from the IRS to see who is required to pay this fee:

Type of insurance coverage or arrangement

Subject to PCORI fee?

Person responsible for paying and reporting the fee

Accident and health coverage or major medical insurance coverage Yes
  • The issuer if insured
  • Plan sponsor if self-insured
Retiree-only health or major medical coverage Yes
  • The issuer if insured
  • Plan sponsor if self-insured
Health or major medical coverage under multiple policies or plans Yes
  • Each issuer or plan sponsor
  • Special rules for coverage under multiple applicable self-insured health plans
COBRA coverage Yes
  • The issuer if insured
  • Plan sponsor if self-insured
Health Reimbursement Arrangement (HRA), including a premium-only HRA Yes, unless the arrangement satisfies the requirements for being treated as an excepted benefit
  • The plan sponsor
  • Special rules for coverage under multiple applicable self-insured health plans and special counting rules for HRAs
Flexible Spending Arrangement (FSA) Yes, unless arrangement satisfies requirements for being treated as excepted benefit
  • Plan sponsor
  • Special counting rules for FSAs
State & local government health or major medical plans for employees and/or retirees Yes
  • The issuer if insured
  • Plan sponsor if self-insured
Stand-alone dental or vision coverage No  
Group insurance policy designed and issued specifically to cover primarily employees working and residing outside the U.S. No  
Self-insured health plan designed specifically to cover primarily employees who are working/ residing outside the U.S. No  
Medicare No  
Medicaid No  
Children’s Health Insurance Program (CHIP) No  
Military health plans established by federal law to provide medical care (other than through insurance policies) to individuals (spouses or dependents) by reason of the individual being (or having been) a member of the Armed Forces of the U.S. No  
Certain Indian tribal government health plans (programs established by federal law to provide medical care other than through insurance policies) No  
Health Savings Arrangements (HSAs) No  
Archer Medical Savings Accounts (MSAs) No  
Hospital indemnity or specified illness benefits No  
Stop-loss or indemnity reinsurance No  
Employee assistance programs, disease management programs, or wellness programs No, if the program doesn’t provide significant benefits in the nature of medical care or treatment  
Accident-only coverage (including accidental death and dismemberment) No  
Disability income coverage No  
Automobile medical payment coverage No  
Workers’ compensation or similar coverage No  
On-site medical clinic No  

Read this article for details on what the fee is proposed to pay for and more information on who is subject to this fee. http://www.bizactions.com/n.cfm/page/e105/key/236086523G565J1976948P0P10245999T0/

About The Web Accountant

Justin is a seasoned accountant with over 10 years experience in business and accounting including public accounting, corporate accounting, government contracting, real estate, retail, individual and business tax preparation. Justin has a bachelor of science degree in finance with a concentration in advanced accounting from the University of Maryland. Justin is an IRS Registered Tax Professional and works via the web with clients anywhere in the world and is available in person to clients in the Maryland, Washington D.C. and Virginia area.

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