PCORI Fee Deadline Just Around the Corner
June 20, 2018 – The Affordable Care Act requires health insurers and sponsors of self-funded group health plans (including health reimbursement arrangements) to pay a Patient-Centered Outcomes Research Institute (PCORI) fee for each year from 2012 to 2019. The PCORI fee for plan years that ended in 2017 is due by July 31, 2018.
How Much is the PCORI Fee?
For 2017 plan years that ended on or after October 1, 2017, the PCORI fee is $2.39 per covered life. For 2017 plan years that ended before October 1, 2017, the PCORI fee is $2.26 per covered life.
PCORI fees are based on the average number of covered lives under the plan or policy. This generally includes employees (and retirees) and their enrolled spouses and dependents. Individuals who are receiving COBRA or other continuation coverage must be included in calculating the PCORI fee.
IRS regulations provide three permissible methods for calculating the number of covered lives under the plan:
- Actual Count Method. Under the actual count method, the average number of covered lives for a plan year may be determined by adding the total of lives covered for each day of the plan year and dividing that total by the total number of days in the plan year.
- Snapshot Method. Under the snapshot method, the average number of covered lives may be determined based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
- Form 5500 Method. Under the Form 5500 method, the average number of covered lives may be determined based on a formula that takes into account the number of participants reported on the Form 5500 annual report for the plan.
P • C • O • R • I
Patient-Centered Outcomes Research fee
Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants.
If the plan is insured, the insurance carrier pays the fee on behalf of the policyholder.
If the plan is self-insured, the employer/plan sponsor must file the Form 720 and pay the fee to the IRS directly.
Who is Responsible for Paying the PCORI Fee?
For fully-insured health plans, the insurer is responsible for reporting and paying the fee. For self-funded group health plans (including health reimbursement arrangements), the employer/plan sponsor is responsible for reporting and paying the fee.
How are PCORI Fees Reported and Paid?
PCORI fees are reported on IRS Form 720 Quarterly Federal Excise Tax Return, which includes a section to report the PCORI fee. There is a payment voucher at the bottom of the Form 720, which should be completed to show the amount of the payment. It is important to check the “Second Quarter” box on the payment voucher when submitting the IRS Form 720 and PCORI fee payment to the IRS.