What is the PCORI Fee?
The Affordable Care Act established the Patient-Centered Outcomes Research Institute (PCORI) to explore the effectiveness, risks and benefits of medical treatments. The fees were originally scheduled to be collected for plan years and policy years that end after September 30, 2012, and before October 1, 2019. In a bill recently signed by the President, the PCORI fee has been extended through fiscal year 2029 and all non-excepted employer sponsored health plans need to pay PCORI Fees by July 31st.
Who is responsible for paying the PCORI Fee?
|Health Plan||Responsible Party|
|Fully insured plan||Carrier|
|HRA in conjunction with fully insured plan||Plan Sponsor (Employer)|
|Self- / Level-funded plan||Plan Sponsor (Employer)|
If you are sponsoring a self-funded group health plan, your carrier or TPA may provide you with the data needed to pay the PCORI fee. In addition, the employer may be responsible for reporting and paying the PCORI fee if you maintain any non-excepted employer sponsored health plan.
Health Reimbursement Arrangements (HRAs) are considered self-funded health plans and are subject to the PCORI fee. However, special rules apply to HRAs for purposes of calculating the PCORI fee:
- If the plan sponsor also maintains a self-funded medical plan with the same plan year, the medical plan and HRA may be treated as one plan for purposes of the PCORI fee. However, if the medical plan is fully insured, the medical plan and HRA must be treated as separate plans for purposes of the PCORI fee, with the insurer paying the fee for the medical plan and the employer/plan sponsor paying the fee for the HRA.
- For purposes of counting covered lives for HRAs, only employees need to be counted; spouses/dependents are not included.
How much is the PCORI Fee and when is it due?
The fee amount depends on when the self-funded contract year ended. Per https://www.irs.gov/pub/irs-drop/n-20-84.pdf, for policy and plan years ending on or after January 1, 2020 through September 30, 2020, the applicable dollar amount is $2.54. For policy and plan years ending on or after October 1, 2020 through December 31, 2020, the applicable dollar amount is $2.66.
The fee is calculated based on the *average number of lives covered under the plan (including employees, dependents, COBRA participants, and covered retirees) and is due by July 31st following the end of each applicable year. The fee must be paid and reported using the revised Form 720 for more information see Part II, page 8-9 of the instructions (PDF).
Where can I find more information?
*For more information and instructions for determining average number of lives covered.
Answers to Frequently Asked Questions (to be updated by the IRS)