Under the Affordable Care Act, companies that issue certain health insurance policies and sponsors of self-insured health plans (including HSAs) must pay an additional fee on their second quarter tax payments. The fee, in the amount of $1 per covered life, per year, must be reported and paid with the second quarter Form 720. The fee is designated to fund the Patient Center Outcome Research Institute (PCORI).

The annual fee is going up next year, adjusting to $2 per covered life for policy or plan years ending Oct. 1, 2013, through Sept. 30, 2014. After that date the annual fee will be adjusted by the Secretary of Treasury based on the percentage increase in the projected per capita amount of national health expenditures. The fee is scheduled to be phased out after 2019.

Companies whose healthcare plans qualify for the fee should receive a notice from the administrator of their Health Reimbursement Account (HRA) specifying the amount due, along with instructions for reporting the fee on Form 720.

If a second quarter Form 720 must be filed only to report the new PCORI fee, there is no need for you to file additional Forms 720 during the other quarters of the year, unless you have other fees or taxes to report.

The IRS provides detailed instructions on filing Form 720 on their website here.

If you have any questions about the Affordable Care Act or other tax issues, please contact Gray, Gray & Gray's Tax Department at (781) 407-0300.