Compliance Alert: Reminder About PCORI Fees

May 28, 2021

Employers who sponsored self-funded health plans that ended sometime during 2020 are required to report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fees no later than July 31, 2021.
In Notice 2020-84, the IRS provided the adjusted PCORI fee of $2.66 for plan years ending in October 2020 through September 2021. Employers who sponsored self-funded group health plans ending sometime during are required to report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fees annually. In the spending bill passed late in 2019, the PCORI fee (which was set to expire) was extended another 10 years.

Background
General summary information regarding PCORI fees can be found at https://www.irs.gov/newsroom/patient-centered-outcomes-research-institute-fee.
Health insurance carriers pay the fee directly in the case of fully-insured plans, so employers offering only fully-insured group health plans do not have to do anything. However, employers are responsible for reporting and paying the fee for any self-funded group health plans, including HRAs. The PCORI fee applies to most group health plans, but not to excepted benefits. The IRS published a chart that describes the different types of plans subject to the fee here – https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangements .
The fee is paid using quarterly excise tax Form 720, Line 133, and must generally be paid no later than July 31st of the year following the last day of the plan year. If any corrections need to be made for prior years, use Form 720X.

Fee Amount
Payment amounts due for 2020 will differ based on the employer’s plan year. The IRS put together a chart showing applicable fee amounts depending on the plan year end date which can be found here. The fees due in July 2021 are as follows:
     • $2.54 per covered life for plan years ending in January – September 2020.
     • $2.66 per covered life for plan years ending in October – December 2020.

Calculating the Average Covered Lives
Self-funded plans may use one of three methods to determine the average covered lives used for reporting and paying the PCORI fee: (i) the actual count method; (ii) the snapshot method; or (iii) the Form 5500 method. There are special rules that apply for employers offering multiple self-funded plans or an HRA integrated with a fully-insured plan.

     • Multiple Self-Funded Plans – If one plan sponsor maintains more than one self-funded health plan with the same 
        plan year, the arrangements can be treated as a single plan for purposes of the fee.
     • HRAs – An employer who sponsors an HRA integrated with a fully-insured medical plan is required to pay the fee
        only with respect to each HRA participant/employee (not required to count dependents or beneficiaries).

For more details on the PCORI fees, see our summary found here – https://www.benefitcomply.com/resources/2021/05/27/pcori-fee-summary/

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