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PCORI fee deadline

PCORI stands for Patient- Centered Outcome Research Institute. Congress created this nonprofit under the Affordable Care Act with the goal of helping patients and medical professionals make informed decisions on health treatments.

Funding for this non-profit comes from a fee that is charged annually to qualifying employers. Most employers do not have to do anything because their employer-sponsored health plans are provided through group insurance contracts. Those contracts make the carrier responsible for paying the fee.

However, employers who self-insure, offer Health Reimbursement Arrangements (HRA), or offer employer funded Flexible Spending Accounts (FSA) are responsible for paying the PCORI fee. These fees were scheduled to terminate after September 30, 2019. However, as part of the Further Consolidated Appropriations Act of 2020, the fees have been reauthorized through September 30, 2029.

We have provided a list of frequently asked questions to help self-insured employers begin the filing process.

When is the PCORI fee due?

Payment is due by July 31st following the end of the plan year.

What plans are subject to the PCORI fee?

All health plans (even the grandfathered ones), HRAs, and some employer funded FSA plans.

Which plans are NOT subject to the PCORI fee then?

➢ Plans that are for “excepted benefits”

  • Dental plans
  • Vision plans
  • FSAs with little or no employer contributions
  • Certain supplemental or gap-type plans
  • Limited purpose FSAs

➢ Plans that do not provide benefits for medical care or treatment

  • Employee assistance
  • Disease management
  • Wellness programs
  • Stop-loss Insurance

➢ Health Savings Accounts (HSA)

View this helpful chart to see which plans are subject to the fee.

What if I have multiple self-insured plans?

A fee per plan is generally required unless you can combine two or more plans. In order to combine plans, they must meet the following requirements:

  • Same plan sponsor
  • Same plan year
  • Same group covered

If you have one plan covering a group of retirees, and a different plan covering your current active employees, you will pay on both plans.

What about HRA plans?

  • If you have a self-insured plan that offers an HRA with it, you only must pay the fee once
  • If you have a stand-alone HRA, you pay the fee on the HRA
  • If you have an insured group health plan through a carrier and you also offer an HRA, you must pay the fee on the HRA

How Do I Calculate the Fee?

The fee is multiplied by the average number of participants covered under your health plan for that plan year. Participants include employees, dependents, retirees, and COBRA enrollees.

The IRS approves three counting methods:

Average Count Method

  • Count the number of participants covered each day of the plan year. Divide that number by the days in the plan year.

✓ Snapshot Methods

  • Count the number of participants covered on the same day each quarter. Divide that number by the amount of quarters within the plan year or
  • Count the participants covered on the first of each month. Divide that number by the number of months within your plan year.

✓ Form 5500 Method

  • Average number of participants can be based off the reported amount on Form 5500, Annual Return/Report of Employee Benefit plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

✓ Other counting rules

  • HRA
    • Assume one participant. Dependents are not included with this count.
  • Employer funded FSA
    • Assume one participant. Dependents are not included with this count.

How much is the PCORI fee?

➢ If your plan year ended on or before December 31, 2019, the fee is $2.45 multiplied by the average number lives covered under the plan.

How Do I Report and Pay the Fee?

Form 720, Quarterly Excise Tax Return, is used for reporting and paying the fee.

View the Instructions for Form 720. It is always best practice to check in with your tax specialist prior to filing anything with the IRS.

The PCORI deadline is right around the corner. Visit the IRS webpage for more information on filing the fee and visit the PCORI website to learn more about the research the fee has helped fund.

Talk to Payroll Systems with any questions about PCORI fees or any other concerns you may have.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.