PCORI is an acronym that stands for Patient-Centered Outcomes Research Institute that was created as part of the Affordable Care Act (ACA). PCORI fees are used to fund PCORI that aims to help patients, clinicians, caregivers, policymakers, and healthcare providers make informed decisions through evidence-based research of medical treatments. In doing so, they can improve patient outcomes and overall healthcare delivery.
PCORI fees were originally set to apply until 2019. However, these were extended under the Bipartisan Budget Act of 2019. As a result, PCORI fees have been extended for another ten years until 2029.
Who is required to pay PCORI Fees?
PCORI fees are paid to the Internal Revenue Service (IRS) by self-insured employers. Also, PCORI fees are paid by insurance providers of specified health insurance policies for those employers who are fully insured.
The annual fee is filed every year using IRS Form 720 (Quarterly Federal Excise Tax Return). The due date is July 31 of the year following the last day of the policy or plan year.
For those who are required to pay PCORI fees but do not need to report any other liability under Form 720, you can file Form 720 once a year which is due on July 31. However, if you are required to pay PCORI fees and you have other liabilities to report under Form 720, you must pay PCORI fees and file Form 720 in the second quarter before July 31.
How much is the PCORI Fee?
The amount of the PCORI fee depends on the “average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year.” This is according to the Internal Revenue Service (IRS). The PCORI fee is adjusted by the IRS yearly for inflation. Because of this, it is best to check the IRS for the updated fees. Presently, the PCORI fee is at $2.66 per plan enrollee. This amount has increased from $2.54 in 2020.
In terms of the number of lives covered, all individuals covered during the policy year are counted. This means that, for example, an employee who has one dependent is counted as two separate covered lives unless the plan is an HRA or FSA.
What are the types of insurance coverage plans subject to PCORI Fees?
PCORI fees are applied to fully-funded health insurance policies by health insurers and self-funded insurance plans of employers including the following:
Accident and health coverage and major medical coverage plans
Short year plans
COBRA coverage
Health Reimbursement Arrangement (HRA)
Premium-only Health Reimbursement Arrangement (HRA)
Major medical coverage for retirees
Short year plans
What are examples of types of insurance coverage plans that are exempted from PCORI Fees?
PCORI fees do not apply to the following:
Exempt governmental programs like Medicare and Medicaid
Children’s Health Insurance Program
Plans that offer only dental benefits coverage
Plans that offer only vision benefits coverage
Military health plans
Insurance coverage for employees working outside the United States
Certain Indian tribal government health plans
Health Savings Arrangements (HSAs)
Archer Medical Savings Accounts (MSAs)
If you are unsure about a health plan and you would like to see a more in-depth list, please go to the Internal Revenue Service (IRS) website.
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