PCORI Fees Increased

June 11, 2020

Employer Payments Due by July 31, 2020

A small, less-talked-about piece of the SECURE Act (Further Consolidated Appropriations Act) of 2020 was the extension of Patient-Centered Outcomes Research Institute (PCORI) fees to continue through plan years ending before October 2029. Employers who sponsor self-insured health plans, and 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.

On June 8, 2020, the IRS announced (Notice 2020-44) an increase to the PCORI fee amount to be paid by plan sponsors with a plan year end date between October 1, 2019 and December 31, 2019. Fee amounts to be paid by Friday, July 31, 2020 are now:

$2.45/person for plan years ending between Oct. 1, 2018-Sept. 30, 2019
$2.54/person for plan years ending between Oct. 1, 2019-Sept. 30, 2020

Health plans with ending dates from January 1, 2019, to December 31, 2019, must file IRS Form 720, Quarterly Federal Excise Tax Return, along with the applicable fee by July 31, 2020.

For plan or policy years ending on or after October 1, 2019 and before October 1, 2020, insurers and self-insured plan sponsors may use any reasonable method to calculate the average number of covered lives on which to apply the fee. The reasonable method must be applied consistently for the duration of the year. This reasonable method allows for transition relief for self-insured plan sponsors who may not have counted their employees during 2019 thinking that the PCORI fee was scheduled to sunset. (Per the Affordable Care Act, PCORI fees were set to expire in 2019.)

Note that self-insured plans are permitted to continue using one of three methods to calculate the PCORI fee: the actual count method, the snapshot method, and the Form 5500 method.

The IRS provides detailed guidance on:

Find an updated version of IRS Form 720 here - https://www.irs.gov/pub/irs-pdf/f720.pdf