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When are the fees effective?
The fees are effective for policy and plan years ending after September 30, 2012. The fee does not apply to plan years ending after September 30, 2019. If the plan year were the calendar year, the fee would apply to calendar years 2012 through 2018. The fee is equal to two dollars (one dollar in the case of plan years ending before October 1, 2013) multiplied by the average number of lives covered under the plan. In the third assessment year, the fee is indexed according to the increase in per capita national health expenditures as determined by the Department of Health and Human Services.
How will the fees be used?
The fees will be used to fund the Patient-Centered Outcomes Research Institute, which was established by PPACA to assist patients, clinicians,purchasers, and policymakers in making informed health decisions. The Institute will not be an agency or establishment of the United States government. The Institute will conduct research to evaluate and compare health outcomes, as well as the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs or other items or strategies that treat, manage, diagnose, or prevent illness or injury.
What self-funded plans are subject to the fee?
Notice 2011-35 defines "applicable self-insured health plan" as any plan for providing accident or health coverage if any portion of the coverage is provided other than through an insurance policy and the plan is established or maintained (1) by one or more employers for the benefit of their employees or former employees, (2) by one or more employee organizations for the benefit of their members or former members, (3) jointly by one or more employers and one or more employee organizations for the benefit of employees or former employees, (4) by a voluntary employees' beneficiary association, (5) by any organization as described in Code section 501(c)(6), or (6) in the case of a plan not previously described, by a multiple employer welfare arrangement, a rural electric cooperative, or a rural telephone cooperative association.
The plan sponsor of the self-funded plan is required to pay the fee.
How is "plan sponsor" defined?
"Plan sponsor" is defined as the employer in the case of a plan established or maintained by a single employer or the employee organization in the case of a plan established or maintained by an employee organization. In the case of 1) a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, 2) a multiple employer welfare arrangement, or 3) a voluntary employees' beneficiary association, the "plan sponsor" is the association, committee, joint board of trustees, or other similar group of representatives of the parties that establish or maintain the plan. Governmental entities that are sponsors of applicable self-funded plans are generally subject to the fees.
Does the fee apply to fully insured plans?
Yes. The fee is imposed on "specified health insurance policies," which is broadly defined as any accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States. "Specified health insurance policy" does not include any insurance if substantially all of its coverage is of "excepted benefits" (i.e., standalone dental and vision, hospital indemnity, etc.). The issuer of the health insurance policy is required to pay the fee.
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