The Patient-Centered Outcomes Research Institute (PCORI) fee was established as a part of the Affordable Care Act (ACA) to fund medical research. Insurers and employers with self-insured plans are subject to the fee. The last PCORI fee payment was expected to occur on July 31, 2019 (or July 31, 2020 for non-calendar year plans). The Further Consolidated Appropriations Act of 2020, signed into law on December 20, 2019, extended the PCORI fee for another 10 years, which means employers with self-insured plans must continue paying the administratively burdensome PCORI fee. The amount of the fee due will vary, depending on when the payer’s plan year ends.
Plan sponsors of self-insured health plans are required to pay the PCORI fee for certain health coverage arrangements. Plan sponsors of fully-insured health plans are not responsible for paying the PCORI fee (the obligation rests with the insurer). See this IRS chart for a list of insurance coverage or arrangements subject to the PCORI fee.
A PCORI payment is due July 31, 2020 for non-calendar year plans that end between January 1, 2019 and September 30, 3019. The PCORI fee due for these plans is $2.45 per person covered under the applicable health plan. The IRS has not yet announced the specific fee due July 31, 2020 for plan years ending between October 1, 2019 and December 31, 2019; however, it is expected to be slightly higher than $2.45 per covered member. The IRS has maintained a PCORI Filing Due Dates and Applicable Rates chart to assist insurers and plan sponsors with determining the applicable fee and due date based on the end date of a policy/plan year.
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 the payment can be made through the Electronic Federal Tax Payment System (EFTPS). Detailed guidance regarding how to calculate, report, and pay the fee is provided on the IRS PCORI fee webpage.
Additional Guidance Needed for Plan Years Ending Between October 1, 2019, and December 31, 2019 – What to do Now?
It is currently unclear how or if plans with plan years ending between October 1, 2019 and December 31, 2019 will be required to pay PCORI fees by July, 31 2020. As of the current date, we note that the IRS has not announced the applicable fee, or updated its PCORI webpages or the current version of Form 720 to provide direction on how to properly report PCORI-related information for plan years ending after October 1, 2019. Consequently, we expect the IRS will shortly provide additional direction on how to comply with the PCORI fee requirement for these plans. We are also hopeful there may be a further extension of the due date particularly in light of the current COVID-19 crisis.
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.