PCORI Fees Due July 31, 2019
May 30, 2019
The next annual fee that sponsors of self-insured health plans must pay to fund the federal Patient-Centered Outcomes Research Institute (PCORI) is due July 31, 2019, using IRS Form 720. In addition to self-insured medical plans, health flexible spending accounts (health FSAs) and health reimbursement arrangements (HRAs) that fail to qualify as “excepted benefits” are required to pay the per-enrollee fee. The fee was set by the IRS at $2.45 per person covered by plan years ending Oct. 1, 2018, through Sept. 30, 2019.
The Affordable Care Act mandated payment of an annual PCORI fee by plans with terms ending after Sept. 30, 2012 and before Oct. 1, 2019 to provide initial funding for the Washington, D.C.-based institute. PCORI funds evidence-based research on the comparative effectiveness of medical treatments so that patients and their doctors can make better-informed health care decisions.
Self-insured plans pay the PCORI fee themselves, while insurance companies pay the fee for fully insured plans but may pass the cost along to employers through higher premiums. If a self-insured medical plan has an integrated self-insured HRA, the Plan Sponsor only has to pay the PCORI fee once, not twice for each plan.
Fees are paid based on the average number of covered lives under the plan. For FSAs and HRAs, a covered life is defined as the participant. For medical healthcare plans, covered lives are defined as the employee and dependents. A health FSA has to have $500 of employer funds in order to be non-excepted. Non-excepted FSAs are also required to pay PCORI fees.
The PCORI fee will not be assessed for plan years ending after Sept. 30, 2019, so for a calendar-year plan, the last year for assessment is the 2018 calendar year. For non-calendar-year plans that end between Jan. 1, 2019 and Sept. 30, 2019, however, there will be one last PCORI payment due by July 31, 2020.
The U.S. Department of Labor says the fee cannot be paid from plan assets and must be paid by the plan sponsor. It is not a permissible expense of a self-funded plan and cannot be paid in whole or part by participant contributions.
PCORI fees should not be included in the plan's cost when computing the plan's COBRA premium.
However, the IRS has indicated the fee is a tax-deductible business expense for employers with self-funded plans.
If your plan year ended January 1, 2017 - September 30, 2017, the fee is $2.26 per covered life. If your plan year ended October 1, 2017 – December 31, 2017, the fee is $2.39 per covered life.
Please consult your tax advisor for assistance on completion of IRS Form 720 and payment of fees.
Additional details: