PCORI Fees

Demystifying PCORI Fees: Navigating the Basics

Understanding PCORI Fees: PCORI fees, designed to fund the Patient-Centered Outcomes Research Institute (PCORI) trust fund, are integral to the healthcare landscape. These fees are remitted to the Internal Revenue Service (IRS) either by health insurance companies or employers, depending on the plan type. PCORI, established under the Affordable Care Act (ACA), utilizes these funds to support evidence-based research with the goal of enhancing patient outcomes and providing valuable insights to healthcare stakeholders.

Extension and Filing Details:

Initially set to expire in 2019, the PCORI fee was renewed for another decade on December 20, 2019, extending its application until 2029. Filings must be completed by July 31 using Form 720. Although this form is typically quarterly, PCORI fees should be reported and paid annually unless other liabilities necessitate quarterly submissions.

Applicability to Insurance Coverage:

The PCORI fee pertains to specific health insurance policies, encompassing fully funded plans from insurers and self-funded plans from employers. Included in this scope are major medical coverage plans, COBRA coverage, accident and major medical plans, Health Reimbursement Arrangements (HRA), major medical coverage for retirees, and short-year plans. However, certain plans, such as stand-alone vision or dental coverage, international employee insurance, Medicaid, Medicare, CHIP, military health plans, and Health Savings Accounts (HSAs), are exempt.

Fee Calculation Methodology:

The PCORI fee is determined by multiplying the average number of lives covered during the policy or plan year by the applicable dollar amount. The dollar amount, subject to annual inflation adjustments, was $2.45 as of 2020 for plans ending between January and September 2019. Multiple methods for calculating the average number of lives covered exist, varying for self-insured health plans and other specified health insurance policies.

Defining an Individual Life:

Individual lives encompassed by the PCORI fee calculation include employees and their dependents covered during the plan year. For Health Reimbursement Arrangements (HRAs) and Flexible Spending Arrangements (FSAs), one life is counted for each employee.

Navigating the intricacies of PCORI fees is crucial for compliance and financial planning, requiring a thorough understanding of their application and calculation methods. For detailed and up-to-date information, reference the IRS resources and guidelines on PCORI fees.