- On June 6, 2024
For many employers, two crucial federal compliance deadlines are coming up on July 31, 2024: the filing and payment of the Patient-Centered Outcomes Research Institute (PCORI) fee and the filing of Form 5500. To ensure timely client filings, brokers should ensure that any group clients subject to either the PCORI fee filing, 5500 reporting, or both are getting their documentation ready now.
The PCORI fee is an annual assessment charged to all group health plans to pay for federal outcomes-based medical research. It was initially established with the passage of the Affordable Care Act, and Congress renewed it for another 10 years in 2019. Employers who offer fully insured group coverage to their employees do not need to worry about the PCORI fee, as health insurance carriers are responsible for paying the fee on behalf of all fully insured health plan participants. However, all businesses that operate self-insured and level-funded health plans, including health reimbursement arrangements (HRAs), even if they are paired with a fully insured plan and health flexible spending accounts (FSAs) that do not qualify as an excepted benefit, must pay the PCORI fee directly.
To pay the fee, each applicable employer must file Form 720 and make payment to the Internal Revenue Service (IRS) by July 31. Form 720 is a quarterly excise tax form, and applicable businesses should use Form 720 for the Second Quarter of 2024 for their PCORI filing. Businesses use this form even if they do not file Form 720 during any other quarter of the year.
The total number of people covered by the group plan, including all dependents, determines the amount of the tax. Groups whose 2023 plan year ended between January 1, 2023, and September 30, 2023, must pay $3.00 per plan participant by July 31, 2024. For employers whose plan year ended between October 1, 2023, and December 31, 2023, the amount due by July 31, 2024, is $3.22 per plan participant.
Employer group health and welfare plans subject to the Employee Retirement Income Security Act (ERISA) that had 100 or more participants on the first day of their plan year and begin their annual plan year on January 1 must jointly file their Form 5500 for the 2023 plan year with the IRS, the Pension Benefit Guaranty Corporation and Department of Labor (DOL) by July 31. Applicable plans with later 2023 plan year start dates have more time to file their 5500 reporting forms since they are due on the last day of the seventh month after the plan year ends. For employers that haven’t created official ERISA plan documents yet, the default date is January 1, even if the plan renewal is a different time of year.
Form 5500 is an annual report of benefit plan information made to the federal government by employer plan sponsors bound by ERISA. Almost all employer group health plans with fewer than 100 participants qualify for a reporting exemption. However, larger plans must file this report annually, regardless of whether they are fully insured and self-funded. Plans that do not comply or file late face significant penalties from both the IRS and the DOL. Plan sponsors must submit Form 5500 through the DOL’s electronic submission system, known as EFAST2. However, if a business needs more time to finish their submission, then they may file Form 5888 before the original due date of their Form 5500 and get an automatic 2½-month extension.
If an employer plan has combined its various employee benefit offerings into one comprehensive plan document, only one Form 5500 must be filed. However, if different health and welfare benefit plan components have separate plan documents, multiple forms may need to be completed, depending on the participation level in each. Completing Form 5500 requires information from a group’s health insurance carrier and/or third-party administrator, so employers should work with their broker to gather the necessary information.