More than 40% of insurers aren't paying ACA taxes; IRS to beef up enforcement

The Internal Revenue Service isn't doing a good enough job to ensure insurers pay a fee required under the Affordable Care Act, according to a report from the Treasury Department.

The ACA created the patient-centered outcomes research (PCOR) fee, a tax based on the number of people covered under a health plan, which insurers must report annually on the second quarter. If insurers don't pay the PCOR fee, they may have to pay penalties.

The fee is "an important source of funds for research that will enable people to make more informed healthcare decisions," J. Russell George, treasury inspector general for tax administration, said in a statement. "As such, it is important for the IRS to take the steps ... to ensure that the applicable health insurance policy issuers and self-insured plan sponsors comply with the requirements in the law."

Although the department found that more than 72,000 insurers filed a form to pay the PCOR, only about 31,000 insurers (43 percent) paid the fee. That means insurers failed to pay about $3.3 million in PCOR fees, not including penalties and interest.

Based on the report's findings, the department recommends that the IRS identify which insurers failed to pay the PCOR fees, determine if additional enforcement actions are required against the noncompliant insurers and then establish a systemic error report and examine accounts that don't match.

Insurers already had to collectively pay about $8 billion for the ACA's health insurance tax last fall, and many of them paid for the fee by raising premiums and shifting costs to their Medicaid members, FierceHealthPayer previously reported.

To learn more:
- here's the Treasury statement and report (.pdf)