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PCORI

PCORI 2024 Fee Payment Amount Adjusted and Payment Reminder.

The Baldwin Group
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Updated: May 8, 2024
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4 minute read

The annual fee to fund the Patient-Centered Outcomes Research Institute (PCORI) Trust Fund Fee ​is due on July 31, 2024, as applicable to plan years ending in 2023. The fee is paid by filing IRS Form 720 (Quarterly Federal Excise Tax Return) and is based on the number of “covered lives” enrolled in a qualifying plan during the year. The fee per covered life adjusts annually and depends on the plan year end date, as follows:

Plan year ending during:Fee per covered life
January 1, 2023 – September 30, 2023: $3.00
October 1, 2023 – December 31, 2023: $3.22

Employer Action Items

Plan sponsors of self-insured plans are responsible for paying the annual trust fund fee.​ These plan sponsors should consider the following:

  • Determine self-insured health plans (including level funded plans and HRAs integrated with fully insured medical plans).
  • Calculate the PCORI fee using one of three permitted methods (described below).
  • For health reimbursement accounts (HRAs) integrated with fully insured medical plans, calculate separate fee.
  • Maintain records documenting the calculation and payment to substantiate enrollment count and method used.

For plan sponsors of fully insured plans, the trust fund fee is generally paid by insurance issuers; consequently, these plan sponsors generally bear no burden to file or pay PCORI trust fund fees.

For purposes of calculating the PCORI Trust Fund Fee due from an employer, the IRS has adopted three counting methodologies to use in determining the average number of covered lives under a plan:

  1. The Actual Count Method. Under the Actual Count Method, the average number of covered lives is determined by adding the totals of lives covered each day of the plan year and dividing by 365 or 366, as applicable.
  2. The Snapshot Method. Under the Snapshot Method, the average number of covered lives is based on the total number of covered lives on a particular date (or dates) in the first, second, or third month of each quarter, divided by the number of dates on which the count was made. An equal number of dates must be used for each quarter, and each date used must be within three days of the corresponding date in the other quarters under this method.
  3. The Form 5500 Method. Under the Form 5500 Method (and for plans that offer both self-only coverage and dependent (family) coverage), the average number of covered lives is based on the total number of participants covered at the beginning, and at the end, of the plan year divided by two, as per the data reported on the plan’s Form 5500 (or Form 5500-SF) filed no later than July 31 following the end of the plan year being reported.

Summary

The PCORI trust fund fee was established as the result of the Affordable Care Act (“ACA”) and first applied for plan or policy years ending on or after October 1, 2012. The trust fund fee is imposed on health insurance issuers and self-insured plan sponsors for purposes of funding the comparative effectiveness research institute. The PCORI trust fund fee was originally scheduled to expire in 2019; however, a federal spending bill extended the fee for an additional 10 years. As a result, the fee will apply through plan or policy years ending before October 1, 2029.

The annual fee is considered an excise tax, reportable on IRS Form 720 during the second-quarter reporting period. It is due by July 31 of the year following the last day of the plan year being reported. Payment is to be remitted along with the Form 720 submission. The exact employer fee is dependent upon the underlying plan’s plan year.

  • Plans subject to the fee include:
  • Plans sponsored by private employers;
  • State and local governmental health plans​;
  • Both grandfathered and non-grandfathered plans;
  • Retiree-only medical plans​; and,
  • HRAs and health care flexible spending accounts (“FSA”) that are not excepted benefits under HIPAA.

Note: the fee is not assessed against certain “excepted benefits,” such as stand-alone dental and vision plans, most health care FSAs, employee assistance programs, disease management programs, wellness plans than do not provide significant benefits in the nature of medical care, plans covering primarily employees working outside the United States, as well as stop-loss and reinsurance policies.

A plan sponsor may treat multiple self-insured plans with the same plan year as a single plan for reporting and payment purposes. For example, a plan sponsor with a self-insured plan providing major medical benefits and a separate self-insured plan with the same plan year that provides prescription drug coverage may be treated as a single plan so each covered life is counted only once; however, plan sponsors administering a health reimbursement account (“HRA”) that is integrated with their fully insured medical plan may be subject to a separate PCORI fee assessment for the HRA.

The Internal Revenue Service (IRS) issued Notice 2023-70 increasing the fee amount for plan years ending on or after October 1, 2023, and before September 30, 2024, to $3.22 (multiplied by the average number of lives covered under the plan during such period). For plan years that ended on or after October 1, 2022, and before October 1, 2023, the fee amount was $3.00 (multiplied by the average number of lives covered under the plan during such period).

For More Information

The IRS maintains the following resources related to PCORI Trust Fund Fee payment calculations and IRS Fomr 720 filing submissions:

PCORI Fee Overview Page;

PCORI Fee: Questions and Answers;

PCORI Fee Due Dates and Applicable Rates;

Chart: Application of the PCORI Fee to Common Types of Health Coverage or Arrangements.


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