SDF Associates

Preparing for health care reform’s Comparative Effectiveness Research Fee

The health care reform law includes a new “Comparative Effectiveness Research Fee” (CERF) for insurers and self-insured plans to fund research that determines the effectiveness of various forms of medical treatment. The Internal Revenue Service (IRS) issued its final rule on this provision on December 5, 2012.

The fee applies on the first day of the policy/plan year beginning on or after October 2, 2011 and continues to apply through policy/plan years ending before October 1, 2019. (These dates are based upon the federal government’s fiscal year of October 1 through September 30.)

The fee is classified as a tax, and it will be reported and paid to the IRS via Form 720 Federal Excise Tax Return. Currently, Form 720 is a quarterly reporting form, and is being revised by the government to account for this annual fee.  We expect to receive updated forms and filing instructions and will keep you informed.

The fee is based on the average covered lives for the applicable 12-month policy/plan year and is payable on July 31 of the calendar year that follows the year in which the policy/plan year ends. 

See    Cerf Fact Sheet