The Patient-Centered Outcomes Research Institute (“PCORI”) fee was established as part of the Affordable Care Act (“ACA”) to fund medical research. Employers and plan sponsors who sponsored a self-insured medical plan that ended anytime during calendar year 2022 are required to report and pay the PCORI fee no later than July 31, 2023. Detailed guidance regarding how to calculate, report, and pay the fee is provided on the IRS PCORI fee webpage. A summary of key facts is below.
Plan sponsors of fully insured medical plans are not responsible for paying the PCORI fee (the obligation rests with the insurer). Plan sponsors of most self-insured medical plans (including health reimbursement arrangements or HRAs) are required to pay the PCORI fee. Special rules apply, such as multiple self-insured arrangements established and maintained by the same plan sponsor and with the same plan year are subject to a single fee. See this IRS chart for details on the different types of plans subject to the fee.
The PCORI fee payment deadline is July 31, 2023, for plan years that end in calendar year 2022.
The PCORI fee due differs based on the employer’s plan year(s):
The filing and remittance process to the IRS is largely unchanged from previous years. The PCORI fee is paid using IRS Form 720, Quarterly Federal Excise Tax Return, and completing Part II, Number 133 of Form 720. Note that we expect the IRS to shortly issue an updated version of the Form to reflect the 2022 fee amounts (as of May 31st the most current Form 720 still reflects the 2021 fee amounts). Specific instructions regarding PCORI can be found on page 9 of the Form 720 Instructions. Plan sponsors who are not required to report any other liabilities on a Form 720 will be required to file the Form only once per year. Note that in the header of the Form, the quarter ending date should be June 30, 2023, to indicate the Form is being filed for the second quarter. Plan sponsors are not required to pay the fee electronically, but if paid through the Electronic Federal Tax Payment System, the payment should be indicated as applied to the second quarter. If paid by mail, it is very important that the Payment Voucher (720-V) indicate the tax period for the fee is for the “2nd Quarter” (otherwise IRS may send a late notice).
Should you have questions about this or any other aspect of healthcare reform, please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.