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PCORI Fees Payable by July 31, 2020, for Self-Insured Health Plans

Remember to File Your PCORI Fees in 2020

The Further Consolidated Appropriations Act 2020, signed into law on December 20, 2019, extended the Patient-Centered Outcomes Research Institute (PCORI) Trust Fund for 10 years.  With this new change in law, the PCORI fee, which expired in 2019, was reinstated and extended through 2029.

The rates per covered life per year used to calculate the PCORI fee due by July 31, 2020, are as follows:

Plan Year Ending… Amount of PCORI Fee
… January 1, 2019 – September 30, 2019 $2.45 per covered life per year
… October 1, 2019 – September 30, 2020 $2.54 per covered life per year

The fee is paid using the 2nd quarter Form 720.

A Review of the History and Purpose of PCORI Fees

PCORI is a government-sponsored organization charged with funding comparative effectiveness research that assists consumers, clinicians, purchasers, and policy makers in making informed decisions intended to improve health care at both the individual and population levels, according to the Institute of Medicine. PCORI was established by Congress through the Patient Protection and Affordable Care Act of 2010 (ACA).

PCORI is funded by the Patient-Centered Outcomes Research Institute Trust Fund which was also established as a part of the ACA. PCORI’s annual income is received from the United States Treasury as well as PCORI fees, which are assessed on Medicare, private health insurance, and self-insured plans. The ACA called for the PCORI fees to be imposed for plan years ending before October 1, 2019. The fee, required to be reported only once a year is based on the average number of lives covered under the policy or plan using one of three methods (the Actual Count Method, the Snapshot Method, or the Form 5500 Method). The Internal Revenue Service has allowed for transitional relief for plan years ending on or after October 1, 2019, and before October 1, 2020, as plan sponsors may not have anticipated the need to identify covered lives, believing the PCORI fee was expiring.  This transitional relief allows plans to use any reasonable method for calculating the average covered lives. Similar relief was allowed in 2012, the initial year of the PCORI fee requirement.

For questions or more information on filing your PCORI fees, please contact a member of Withum’s Multiemployer or Labor Organization groups.

A basic summary of the application of PCORI fees applied to certain types of coverage can be found below.:

Type of insurance coverage or arrangement Subject to the fee? Person responsible for paying and reporting the fee
Accident and health coverage or major medical insurance coverage YES
  • The issuer if insured
  • The plan sponsor if self-insured
Retiree-only health or major medical coverage YES
  • The issuer if insured
  • The plan sponsor if self-insured
Health or major medical coverage under multiple policies or plans YES
  • Each issuer or plan sponsor
COBRA coverage YES
  • The issuer if insured
  • The plan sponsor if self-insured
Health Reimbursement Arrangement (HRA), including a premium-only HRA Yes, unless the arrangement satisfies the requirements for being treated as an excepted benefit
  • The plan sponsor
Flexible Spending Arrangement (FSA) Yes, unless the arrangement satisfies the requirements for being treated as an excepted benefit
  • The plan sponsor
State & local government health or major medical plans for employees and/or retirees YES
  • The issuer if insured
  • The plan sponsor if self-insured

For further details, visit: https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangements

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