The Affordable Care Act imposes a fee on employers that sponsor certain self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). PCORI fees support research to evaluate and compare health outcomes and the clinical effectiveness of certain medical treatments, services, procedures, and drugs. The fee must be reported once a year on the second-quarter Form 720. It must be paid by July 31 of the calendar year immediately following the last day of the plan year to which the fee applies.
The fee was originally effective for plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. However, a 2019 continuing spending resolution reinstated PCORI fees for the 2020-2029 fiscal years. As a result, specified health insurance policies and applicable self-insured health plans must continue to pay these fees through 2029.
For plan years ending on or after Oct. 1, 2020, and before Oct. 1, 2021, the fee is $2.66, multiplied by the average number of lives covered under the plan. For plan years ending on or after Oct. 1, 2021, and before Oct. 1, 2022, the fee is $2.79, multiplied by the average number of lives covered under the plan.
Regulations explain how to calculate the average number of lives covered. Note that third-party reporting or payment of the PCORI fee is not allowed. The chart below illustrates how the fees may apply to specific types of health coverage or arrangements.
Information from our HR Libray, HR360