HB Counsel Client Alert – Effective Immediately: PCORI Fee Deadline Approaches and No Action Required for Right to Try Act
PCORI Fee Deadline Approaches and No Action Required for Right to Try Act
This alert provides a reminder regarding an upcoming fee due date and discusses a newly enacted law that will not impact employer sponsored plans.
PCORI Fee Deadline
A reminder that the Patient-Centered Outcomes Research Institute (“PCORI”) fee for 2017 is due by July 31, 2018. The Affordable Care Act imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-funded health plans to help fund the institute. The fee amount is calculated using an average number of covered lives under the policy or plan multiplied by the applicable rate. The average number of covered lives along with the calculated fee amount must be reported once a year on the second quarter IRS Form 720.
IRS instructions for filing Form 720 include information on reporting and paying PCORI fees. If paying the PCORI fee through the Electronic Federal Tax Payment System (“EFTPS”), the fee should be applied to the second quarter (in EFTPS, select “Q2” for the Quarter under Tax Period on the “Business Tax Payment” page).
The insurance carrier pays the PCORI fee for fully insured health plans. Employers with fully insured health plans have no filing requirement; however, insurance carriers do pass along the cost of the fee to employers. Employers sponsoring self-funded health plans must file Form 720 and pay the PCORI fee directly.
Right to Try Act
On May 30, 2018, President Trump signed the Right to Try Act (“Act”) into law. The Act removes certain Food and Drug Administration (“FDA”) restrictions for terminally ill patients to access experimental treatments the FDA has not yet approved, even when ineligible for a clinical trial involving the treatment.
Under an existing rule, patients may already apply to the FDA for access, a process called expanded access or compassionate use. The Act does not require drug manufacturers to provide experimental treatments to the terminally ill; however, it does require manufacturers to report annually on the use of a drug pursuant to the Act. The Act limits liability of a sponsor, manufacturer, prescriber, or dispenser for providing or declining to provide an investigational drug.
The Act does not require employer sponsored plans to provide coverage of drugs the FDA characterizes as investigational or experimental.
Employer plan sponsors do not need to make changes to their group health plans in response to this Act.
Although plan sponsors do not need to make changes to group health plans, plan sponsors should be prepared to answer questions from participants who may not understand that the Act does not require employer sponsored plans to provide coverage of experimental drugs.
- Employers sponsoring self-funded health plans must file Form 720 and pay the PCORI fee by July 31, 2018.
- Employers sponsoring group health plans do not need to make changes to group health plans in response to the newly enacted Right to Try Act.
- Employers sponsoring group health plans should be prepared to answer questions from participants regarding experimental drug coverage in response to the Right to Try Act.
The content herein is provided for educational and informational purposes only and does not contain legal or tax advice. Please contact our office if you have any questions about how to calculate the PCORI fee, or file Form 720, for your self-funded employee health plan.
Dated: July 16, 2018
 See the IRS website at https://www.irs.gov/affordable-care-act/patient-centered-outreach-research-institute-filing-due-dates-and-applicable-rates for the applicable rates.