There are two fees associated with the Patient Protection and Affordable Care Act (PPACA) that impact Health Reimbursement Arrangements (HRAs).
- Reinsurance Fee
- Comparative Effectiveness Research Fee (also referred to as “PCORI fee”, “CER Fee” and “CERF” ).
The reinsurance fee is an annual fee that applies to both insured and self-funded major medical plans. The proceeds will be used to lessen the impact of adverse selection (a higher percentage of sick consumers enrolling) in the individual market.
HRAs are not subject to a separate reinsurance fee because they must be integrated with a group medical plan under PPACA and the reinsurance fee is already being collected for all enrolled participants in the group health plan.
Comparative Effectiveness Research Fee (PCORI)
PPACA established the Patient-Centered Outcomes Research Institute (PCORI) to fund and conduct research to determine the effectiveness of various forms of medical services that treat, manage, diagnose or prevent illness or injury. The work of PCORI is partially funded by the “Comparative Effectiveness Research Fee”, also called the “CER Fee”, “CERF” or PCORI fee charged to health insurers and self-funded group health plans.
HRAs are subject to the PCORI fee, which must be paid be the plan sponsor by July 31st each year using Excise Tax form 720 (instructions for completing the form can be found here). The IRS also has a page on their website that answers many other questions about the PCORI fee.