The annual Patient-Centered Outcomes Research Institute (PCORI) fees are due July 31, 2022, this year.
Employers and insurers offering self-funded health insurance plans should submit the fees ahead of the deadline as it falls on a Sunday this year. Applicable organizations should submit their PCORI payments via the Electronic Federal Tax System, along with the completed Form 720.
The PCORI fee rate for policy plans that end on or after October 1, 2021, and before October 1, 2022, is $2.79. This is a slight increase from the previous plan year, which had a rate of $2.66 for plans that ended on or after October 1, 2020, and before October 2021.
What are PCORI fees?
The PCORI fees are collected annually from issuers of specified health insurance policies and plan sponsors that offer self-funded health insurance plans.
These annual fees help fund the Patient-Centered Outcomes Research Institute and were first introduced as part of the ACA. PCORI is responsible for conducting research to assist policy-makers in making intelligent, thoughtful health decisions.
It’s important to note that the PCORI is calculated based on the average number of lives covered in the health plan policy. All individuals enrolled in the self-funded plan, including spouses, dependents, retirees, and COBRA recipients must be accounted for.
What methods are available for calculating the average number of lives?
There are five primary methods for calculating the average number of lives covered under a self-funded policy:
- Actual Count Method
- Snapshot Method
- Member Months Method
- State From Method
- Form 5500 Method
Depending on if you’re an issuer of specified health coverage or a plan sponsor, the methods available vary. Visit the IRS PCORI page for more information.
Outlook on PCORI
PCORI fees were originally set to expire at the end of 2020 but have since been extended through September 30, 2029. As such, organizations and insurers sponsoring self-funded health insurance plans will need to continue with payments each year.
These fees were first established under the ACA and are separate from the responsibilities of the Employer Mandate.
Under the ACA’s Employer Mandate, ALEs, or employers with 50 or more full-time employees and full-time equivalent employees to:
- Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability
Like missing PCORI fees, failing to comply with the ACA’s Employer Mandate requirements can result in IRS penalties.
For assistance with ACA compliance and completing PCORI fee payments, contact us to learn about our ACA Complete solution. So far we’ve helped our clients prevent over $1 billion in ACA penalty assessments from the IRS.
To get a handle on ACA deadlines, penalty amounts, affordability percentages, and tips for improving ACA compliance download the 2022 ACA 101 Toolkit below.
For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.