PCORI Fee Update

What Is The PCORI Fee?

Patient-Centered Outcomes Research Institute (PCORI) is a fee collected by the Patient-Centered Outcomes Research Trust Fund, an institute that helps fund research that evaluates and compares health outcomes, clinical effectiveness, risks and benefits of medical treatments and services.

Click here to view the updated IRS filing due dates and applicable rates.

What Is The Fee Schedule? When Is It Due?

 *actual or average number of covered employees and dependents

How Is Payment Submitted To The IRS?

Payment must be submitted with the federal excise tax return Form 720.

Who Pays The Fee?

Health insurance issuers and plan sponsors of self-funded plans are responsible for paying the PCORI Fee, which is treated like an excise tax by the IRS.

What Plans Or Policies Are Impacted?

This fee applies to certain specified health insurance plans/policies and includes grandfathered, medical, pharmacy, retiree-only, and any accident or health insurance coverage (including a policy under a group health benefit plan) issued to individuals residing in the United States.

This fee does not apply to other types of policies including "excepted benefits," as defined under HIPAA, such as stand-alone vision, dental, and FSA plans. 

Check the IRS guidelines for a full list of  'excepted benefits.'

For Fully Insured Plans

• The insurance provider is responsible for filing Form 720 and paying the required PCORI fee in the case of fully insured coverage.
• Fully insured customers are not required by the IRS to demonstrate that this fee was paid. Payment of the fee is the sole responsibility of the issuer.
• HRAs, by definition, are accounts funded by the employer, not the member, and the PCORI Fee would apply.

For Self-Funded Plans

• As the plan sponsor, self-funded groups must complete Form 720 and pay the fee directly to the IRS.
• Third-party administrators are prohibited from remitting the fee for their customers.
• Under the final rule, self-funded plans may treat multiple plans as a single self-funded plan for purposes of the fee to avoid double counting of the members.
• HRAs, by definition, are accounts funded by the employer, not the member, and the PCORI Fee would apply.
• Self-funded groups with questions about the filing of excise tax returns should consult with their tax advisor.

Who Are The Members?

A member means all covered lives - employees, spouses, and dependents.

How Do You Count The Membership?

1. Actual Count - Count the total covered lives on each day of the plan year and divide by the number of days in the plan year.
2. Snapshot Method - Use covered lives on a single day (or equal number of dates) in each quarter and divide the total by the number of dates on which a count was made. (The date(s) must be consistent for each quarter.)
3. Snapshot Factor Method – Using covered lives on a single day (or equal number of dates) in each quarter of the plan year, take the number of self-only participants and add the number of other than self-only covered lives multiplied by 2.35, and divide by the number of dates on which a count was made.