PCORI fee deadline

Every year 720,000 Americans have heart attacks and another 380,000 die of coronary artery disease (CAD).  Aspirin is an effective therapy to help reduce that number of deaths. However, it is unclear what the correct dosage should be. Too high of a dose can cause internal bleeding and lead to further medical issues.

Finding that magic number of aspirin is just one example of what the PCORI fee is for.

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. The Aspirin Dosage Study is one of many research programs the PCORI fee has helped fund.

The fee is charged annually. 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. We’ve 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.

That’s really broad. 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 would pay on both plans.

What about HRA plans?

  • If you have a self-insured plan that offers an HRA with it, you only have to 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 have to 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 amount of months within your plan year.
      • You may also use the “snapshot factor” to help count for this method. Count each primary enrollee (employee) with single coverage as “1” and count each primary enrollee with family coverage as “2.35.”
  • 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?

Because this is a government fee, they have conveniently charged two different rates depending on your plan year.

  • If your plan year ended between January 1st – September 30th of 2016, your fee is $2.17 per participant
  • If your plan year ended between Oct. 1st – December 31st of 2016, your fee is $2.26 per participant

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’s 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.