As of October 1, 2012 all group health plans and self-funded plans must pay a Comparative Effectiveness Research fee, or CER fee, to help fund Affordable Care Act’s (ACA) new Patient-Centered Outcomes Research Institute. The CER fees apply for plan years ending on or after Oct. 1, 2012. The CER fees do not apply for plan years ending on or after Oct. 1, 2019. For calendar year plans, the research fees will be effective for the 2012 through 2018 plan years.
The CER fee is $1 multiplied by the average number of lives covered under the plan. The CER fee will increase to $2 for the next plan year. For plan years ending on or after Oct. 1, 2014, the CER fee amount will be indexed for inflation. Sponsors of self-funded plans and issuers must report and pay their CER fees by July 31 of each year for the plan year that ended during the preceding calendar year. The first due date for reporting and paying CER fees is July 31, 2013.
The responsible party for paying the CER fees depends on whether the plan is insured or self-insured. For insured health plans, the issuer of the health insurance policy is required to pay the research fees. For self-insured health plans, the research fees are to be paid by the plan sponsor. Although sponsors of fully-insured plans are not responsible for paying research fees, issuers may shift the fee cost to sponsors through a modest premium increase.
In general, the CER fees are assessed, collected and enforced like taxes under the Internal Revenue Code. The proposed regulations direct issuers and plan sponsors to report and pay the research fees once a year on IRS Form 720 (Quarterly Federal Excise Tax Return). Form 720 and full payment of the research fees will be due by July 31 of each year. It will generally cover plan years that end during the preceding calendar year. Thus, the first possible due date for filing Form 720 is July 31, 2013. Form 720 may be filed with the IRS electronically, but electronic filing is not required.
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