PCORI Fee Due by July 31
Author: Gloria Ju
July 3, 2014
The Affordable Care Act (ACA) requires that the Patient-Centered Outcomes Research Institute (PCORI) fee be paid by July 31. Sponsors of self-insured plans and health insurance issuers must pay the PCORI fee to help finance the PCORI, which was established by the ACA. The fee applies to policy and plan years ending on or after October 1, 2012, and before October 1, 2019, and is due no later than July 31 of the year immediately following the last day of the plan year. As a result, the PCORI payment for 2013 calendar year self-insured plans is due by July 31, 2014.
The PCORI fee is $2 (for plan years ending on or after October 1, 2013, and before October 1, 2014) multiplied by the average number of lives covered under the plan. (For plan years ending on or after October 1, 2014, and before October 1, 2019, the applicable dollar amount will be adjusted for inflation in national health expenditures, as determined by the Secretary of Health and Human Services.) Lives include the participant, the participant's spouse and dependents covered under the plan. The following individuals are counted as well:
- Individuals covered under the Consolidated Omnibus Budget Reconciliation Act (COBRA) (and other types of continuation coverage); and
- Individuals with retiree coverage.
Certain plans are exempt from paying the PCORI fee, including employee assistance plans, disease management programs and wellness programs, as long as these programs do not provide significant benefits in the nature of medical care or treatment. Additionally, the rule does not apply to excepted benefits as defined under the Health Insurance Portability and Accountability Act.
The Internal Revenue Service issued final regulations regarding the calculation of the PCORI fee in December 2012. In accordance with the final regulations, plan sponsors must use one of the following three methods to determine the number of lives covered under the plan:
- Actual count method;
- Snapshot method; or
- Form 5500 method.
A plan sponsor may use a different method from one plan year to the next.
Plan sponsors must use IRS Form 720, Quarterly Federal Excise Tax Return, for reporting and paying the PCORI fee. The Form 720 includes two lines for reporting and paying the PCORI fee: (1) for sponsors of self-insured health plans; and (2) for health insurance issuers. Although the form is titled Quarterly and is typically used for quarterly payments of certain excise taxes, the PCORI fee is only paid annually.