Employers with a group health plan are familiar with PCORI fees. The fees help fund the Patient-Centered Outcomes Research Institute (PCORI), which was founded as a part of the Affordable Care Act (ACA) in 2010. See below for more information on 2019 PCORI fees, what the money pays for, and the future of PCORI payments.
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PCORI Fees
In 2019, the fee is $2.45 per plan participant, for plan years ending from October 1, 2018 through September 30, 2019. This is a $0.06 increase from 2018.
The fee is due July 31.
Reporting Form and Plan Exemptions
To report PCORI, employers need Form 720.
Most self-insured medical plans (including COBRA coverage) are subject to the fee unless the plan is either primarily for employees working/residing outside of the U.S., or is considered an excepted-benefit. Some other exclusions include:
- A health Flexible Spending Account (FSA), as long as the employer does not contribute more than $500 per year and offers another medical plan with non-excepted benefits.
- A Health Reimbursement Arrangement (HRA) is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.
- Health Savings Accounts (HSAs)
The IRS offers a detailed chart on applying PCORI fees to health coverage types.
Calculating PCORI fees
There are three calculation methods: actual count, snapshot and Form 5500. Per IRS guidelines:
- Actual Count Method: A plan sponsor may determine the average number of lives covered under a plan for a plan year by adding the totals of lives covered for each day of the play year and dividing that total by the total number of days in the plan year.
- Snapshot Method: A plan sponsor may determine the average number of lives covered under an applicable self-insured health plan for a plan year based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
- Form 5500 Method: An eligible plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.
End of PCORI fees?
At this time, 2019 is scheduled to be the final year for PCORI fee collection for most plans. The PCORI fee will not be assessed for plan years ending after Sept. 30, 2019.
The first PCORI fee was assessed for plan years ending after Sept. 30, 2012; in that first year, the cost was $1 per plan enrollee, which increased to $2 per enrollee in the second year and was then indexed in subsequent years based on the increase in national health expenditures.
What do PCORI fees go towards?
The PCORI was established with the ACA in 2010 as a private non-profit organization. According to the organization, “We seek to fund useful research likely to change practice and improve patient outcomes. We focus on sharing those results with the public. And we work to influence research funded by others to become more useful to patients and other healthcare decision makers.”
PCORI has funded more than $2 billion in research and related projects.
Contact us today for help with PCORI and to ensure you make the filing deadline.