Once set to expire in 2019, the Patient-Centered Outcomes Research Institute (PCORI) fee was renewed for the next 10 years. This fee, paid every year by July 31 until 2029, is sent to the Internal Revenue Service to fund the Patient-Centered Outcomes Research Institute, an independent nonprofit that develops research to guide patients and caregivers when making healthcare decisions.
PCORI Fees Guide:
As an employer, it’s important to know if you’re responsible for paying PCORI fees. And that depends on which types of healthcare plans you offer to your employees. If you provide a traditional healthcare plan, the insurance company pays the fee. But if you provide self-insured group health plans, such as an ICHRA or QSEHRA, you as the employer pays. However, certain plans, such as HSAs, military health plans, Medicaid, Medicare, CHIP, insurance for employees working outside the US, and vision or dental standalone plans, are exempt from the fee.
The amount of the PCORI fee is based on the average number of participants covered, and below we provide three methods for calculating this fee.
Remember: Carriers, not employers, are responsible for paying the fee for fully insured policies.
How to Calculate PCORI Fees
The PCORI fee is calculated by multiplying the average number of lives covered during a policy or plan year by the applicable dollar amount. The dollar amount is adjusted each year to reflect inflation.
The PCORI regulation provides three methods for calculating the fee:
- Actual count: Add the number of employees covered on each day of the plan year and divide by the number of days in the plan year.
- Snapshot: Choose one or more days during each calendar quarter, add the covered lives on those dates, and divide by the number of dates used.
- Form 5500: Sponsors who offer only individual coverage take the number of participants reported at the beginning of the plan year, plus the number reported at the end of the plan year and divide by two. Plan sponsors who offer coverage other than individual coverage must take the number of participants reported at the beginning of the plan year, plus the number reported at the end of the plan year.
PCORI Fees Quick Guide
- Determine whether your plan is subject to the PCORI fee.
- Self-insured plans such as ICHRA and QSEHRA are generally subject to the fee.
- Fully insured plans are generally the responsibility of the insurance carrier.
- Calculate your average number of covered lives using an approved IRS method.
- Actual Count Method
- Snapshot Method
- Form 5500 Method
- Determine the applicable PCORI fee amount.
- Fee amounts are adjusted annually.
- Refer to the latest IRS guidance or download our PCORI Fees Guide for current rates.
- Complete IRS Form 720.
- PCORI fees are reported annually on the second-quarter Form 720 filing.
- The quarter ending date will be June 30.
- Calculate and enter the total fee due.
- Multiply the average number of covered lives by the applicable fee amount.
- Complete the payment section.
- Employers may pay electronically through EFTPS or submit payment according to IRS instructions.
- Sign and submit Form 720 by July 31.
- The filing deadline is generally July 31 following the end of the applicable plan year.
Need Further Assistance?
Whether you’re filing for the first time or simply want a second set of eyes on your calculations, Flyte HCM can help.
Our team can calculate covered lives, prepare Form 720, and provide filing instructions to help simplify the process.
Prefer to handle the filing yourself? Download our complete PCORI Fees Guide for current fee amounts, filing examples, Form 720 screenshots, and step-by-step instructions.
