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.
Payment is due by July 31st following the end of the plan year.
All health plans (even the grandfathered ones), HRAs, and some employer funded FSA plans.
➢ Plans that are for “excepted benefits”
➢ Plans that do not provide benefits for medical care or treatment
➢ Health Savings Accounts (HSA)
View this helpful chart to see which plans are subject to the fee.
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:
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.
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
✓ Snapshot Methods
✓ Form 5500 Method
✓ Other counting rules
➢ 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.
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.
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.