In December 2012, the Internal Revenue Service (IRS) issued final regulations on a new fee imposed on health insurers and sponsors of self-funded plans to fund the Patient-Centered Outcomes Research Institute (PCORI) in support of clinical effectiveness research. The fee is $1 per covered life (not just covered employee) for 2012, generally speaking, increasing to $2 next year. The fee is paid by the insurance company, where the health plan is insured. For self-insured plans, the plan sponsor must pay the fee.
What was not clear at the time, however, was whether these fees qualified as deductible business expenses. Recently the IRS released a memorandum stating that PCORI fees paid by insurers or plan sponsors are, indeed, ordinary and necessary business expenses and, thus, deductible on the payor’s tax return.
The IRS has updated Form 720 for payment of the PCORI fee.
Click to access the new form, instructions and our Alert on the fee.