The Patient-Centered Outcomes Research Institute (PCORI) fee was established as part of the Affordable Care Act (ACA) to fund medical research. Employers who sponsored a self-insured medical plan that ended anytime during 2020 are required to report and pay the PCORI fee no later than August 2, 2021. Detailed guidance regarding how to calculate, report, and pay the fee is provided on the IRS PCORI fee webpage.
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) 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, 2021 for plan years that end in 2020. However, since the due date for 2021 falls on a Saturday, the traditional July 31 due date is extended to the next business day, which is August 2, 2021.
The PCORI fee due differs based on the employer’s plan year(s). For plan years that ended on or after January 1, 2020 through September 30, 2020, the fee is $2.54 per covered life. The fee payable for plan years ending on or after October 1, 2020 and through December 31, 2020 is $2.66 per covered life. Employers should refer to the IRS PCORI Filing Due Dates and Applicable Rates chart to determine the applicable fee and due date based on the end date of the plan year. Plan sponsors of self-insured medical plans must use one of three existing permissible methods to determine the average covered lives used for reporting and paying the PCORI fee. See PCORI Fee FAQs.
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. Specific instructions regarding PCORI can be found on pages 8-9 of the Form 720 Instructions. Plan sponsors are not required to pay the fee electronically, but if paid through the Electronic Federal Tax Payment System, the payment should be 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.