n-20-84.pdf

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Sections 4375 & 4376 – Insured and Self-Insured Health Plans
Adjusted Applicable Dollar Amount for Fee Imposed by §§ 4375 and 4376
Notice 2020-84
I. PURPOSE
This notice provides the adjusted applicable dollar amount to be multiplied by the
average number of covered lives for purposes of calculating the fee imposed by
§§ 4375 and 4376 of the Internal Revenue Code for policy years and plan years that
end on or after October 1, 2020, and before October 1, 2021.
II. BACKGROUND
Section 4375 imposes a fee on the issuer of a specified health insurance policy
for each policy year ending after September 30, 2012, and before October 1, 2029.
Section 4376 imposes a fee on the plan sponsor of an applicable self-insured health
plan for each plan year ending after September 30, 2012, and before October 1, 2029.
The fee originally expired on October 1, 2019, but was extended by the Further
Consolidated Appropriations Act, 2020, Pub. L. 116-94, 133 Stat. 2534 (2019). The fee
imposed by §§ 4375 and 4376 helps to fund the Patient-Centered Outcomes Research
Trust Fund (PCORTF) and is calculated using the average number of lives covered
under the policy or plan and the applicable dollar amount for that policy year or plan
year. Under §§ 4375(a) and 4376(a), the applicable dollar amount is $2 for policy and
plan years ending on or after October 1, 2013, and before October 1, 2014.
1
Treas.
Reg. §§ 46.4375-1(c)(4) and 46.4376-1(c)(3).

1
The applicable dollar amount is $1 for policy and plan years ending before October 1, 2013.

Under §§ 4375(d) and 4376(d) and Treas. Reg. §§ 46.4375-1(c)(4) and 46.4376-
1(c)(3), the applicable dollar amount for policy years and plan years ending in any
Federal fiscal year beginning on or after October 1, 2014 is increased based on
increases in the projected per capita amount of National Health Expenditures.
Specifically, the applicable dollar amount is the sum of –
(i) The applicable dollar amount for the policy year or plan year ending in the
previous Federal fiscal year; plus
(ii) The amount equal to the product of –
(A) The applicable dollar amount for the policy year or plan year ending
in the previous Federal fiscal year; and
(B) The percentage increase in the projected per capita amount of the
National Health Expenditures most recently released by the
Department of Health and Human Services (HHS) before the
beginning of the Federal fiscal year.
Notice 2020-44, 2020-26 I.R.B. 989, provides that the adjusted applicable dollar
amount for policy years and plan years that end on or after October 1, 2019, and before
October 1, 2020, is $2.54.
III. ADJUSTED APPLICABLE DOLLAR AMOUNT
The applicable dollar amount that must be used to calculate the fee imposed by
§§ 4375 and 4376 for policy years and plan years that end on or after October 1, 2020,
and before October 1, 2021, is $2.66. The increase from the prior amount is calculated
by multiplying the adjusted applicable dollar amount for policy years and plan years
ending in the previous Federal fiscal year, $2.54, by the percentage increase of the

projected per capita amount of National Health Expenditures published by HHS on
March 19, 2020. See: https://www.cms.gov/Research-Statistics-Data-and-
Systems/Statistics-Trends-and-
Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html, Table 3.
The percentage increase is calculated after adjustment to reflect updates to the data
used to calculate the prior amount, $2.54, which was based on the per capita amounts
of National Health Expenditures for 2019 and 2020 published by HHS on February 19,
2019.
IV. EFFECTIVE DATE
This notice is effective for policy years and plan years ending on or after
October 1, 2020.
V. DRAFTING INFORMATION
The principal author of this notice is William Fischer of the Office of Associate
Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes).
For further information regarding this notice, contact Mr. Fischer at (202) 317-5500 (not
a toll-free call).