Earlier this month the IRS issued a notice indicating that the fees associated with Patient-Centered Outcomes Research Institute (PCORI) are increasing this year.
For plans that end on or after October 1, 2021, and before October 1, 2022, the PCORI rate per covered individual is $2.79. As a reminder for employers, the rate for covered individuals with plans that end on or after October 1, 2020, and before October 1, 2021, is $2.66.
The PCORI fees are collected annually from issuers of specified health insurance policies and plan sponsors who offer self-funded insurance health 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.
Organizations that must make the annual PCORI payments should remember to calculate the fee using the average number of lives covered under the policy. This includes all parties enrolled in the plan, such as dependents, spouses, retirees, and COBRA recipients. The IRS provides several methods for calculating the average, including:
- Actual Count Method
- Snapshot Method
- Member Months Method
- State Form 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.
Fees associated with PCORI were set to expire at the end of 2020 but were extended through September 30, 2029, as part of the Further Consolidated Appropriations Act of 2020.
Self-funded employers and health carriers must submit the annual PCORI fees by July 31 via Form 720 and the Electronic Federal Tax Payment Systems (EFTPS).
The PCORI fee payments are responsibilities outside of the ACA’s Employer Mandate, which requires 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.
Unsure of your responsibilities under the ACA’s Employer Mandate? Download the ACA Essential Guide for Employers below:
Need assistance making the annual PCORI fee payments? We can handle this responsibility for you at no additional cost as part of our full-service, ACA Complete solution.