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IRS Releases Updated 2023 PCORI Tax Rates

This week the IRS announced the applicable per participant PCORI tax rates for group health plans with Plan Years ending during the last three months of 2023.  The applicable rate will be $3.22 per participant. The new rates were announced in IRS Notice 2023-70.  The $3.00 per participant applicable rate for plans with Plan Year ending during the first nine months of 2023 was announced last year.

The PCORI tax for Plan Years ending during 2023 is paid in July 2023 using IRS Form 720. The form contains detailed instruction for how to calculate the amount of tax as well as where and when to pay it.

Group health plan sponsors or their professional benefit advisors who need assistance with the PCORI tax filing process are welcome to schedule a call with Admin America’s President, Trey Tompkins. Interested individuals can schedule a call with Trey for an available time that is most convenient for them here.


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COVID-19 PPE is now FSA, HRA and HSA

On March 26, 2021 the IRS released guidance which allows Health Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs) to reimburse plan participants for amounts paid to purchase face masks and other personal protective equipment used to prevent COVID-19.  The guidance also allows owners of Health Savings Account (HSAs) to receive tax free disbursements from their account to cover the same expenses.

These new policies can be found in IRS Announcement 2021-7.  The IRS clarifies that the eligible expenses include “amounts paid for personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of the Coronavirus Disease….”  The announcement further clarifies that the new rule applies to expenses incurred as early as January 1, 2020.

If a Health FSA or HRA was written to exclude these items, the announcement allows the Plan Sponsor to adopt a retroactive amendment to make such expenses eligible so long as the amendment is written no later than December 31, 2022. 

Health FSA documents prepared by Admin America will not require an amendment to take advantage of this revised rule.  Our plans are already written to allow all expenses that are considered to be for medical care under Section 213(d) of the Internal Revenue Code (which now includes COVID related PPE as a result of this announcement).

Likewise, HRA documents that previously provided expense eligibility for all Section 213(d) medical care expenses will not need to be amended to take advantage of this new rule.  Plan Sponsors of other HRAs that would like to take advantage of this new rule by allowing Participants to be reimbursed for PPE expenses may contact an Admin America HRA administrator via e-mail at hra@adminamerica.com to request this change.

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IRS Finally Releases Updated 2019 PCORI Tax Rates

This week the IRS finally announced the applicable per participant PCORI tax rates for group health plan with Plan Year ending during the last three months of 2019.  The applicable rate will be $2.54 per participant.

When the PCORI tax was introduced as part of the Affordable Care Act, it went into effect for Plan Years ending on or after October 1, 2012.  The ACA provided for the tax to increase each year based on inflation with the increased rates going into effect each subsequent October 1.  The increases have historically been announced by the end of each calendar year.  Because the PCORI tax payments are due by July 31 of the following calendar year insurers and Plan Sponsors of self-insured group health plans had plenty of time to calculate their tax and prepare their filings.

Under the terms of the ACA, the PCORI tax would not apply to any Plan Years ending on or after September 30, 2019.  Therefore, there was no need for the IRS to issue an annual increase for Plan Years ending in the fourth quarter of 2019.  However, on December 20, 2019, President Trump signed the “Further Consolidated Appropriations Act” into law. The Act extended the PCORI tax for another 10 years.

At that point, plans with Plan Year ending during the first 9 months of 2019 knew that their tax rate for payments due this July would be $2.45 but we did not know the $2.54 rate for Plan Years ending during the last three months of 2019 until this week.

The new rates were announced in IRS Notice 2020-44.  Additionally, this week the IRS published an updated version of  Form 720 to reflect the extension of the PCORI tax and the new rate for Plan Years ending in late 2019.  Insurers and Plan Sponsors of self-insured group health plans may complete their filings and make their tax payments at this time.” 

More information about the PCORI tax, including which plans are required to file a return and pay the tax, as well as instruction for completing the process are available in a guide we wrote for clients this month.  It is available online here.