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As part of the Further Consolidated Appropriations Act of 2020 signed by the Trump Administration, PCORI fees were extended through September 30, 2029.
Employers should keep a watchful eye however, as the IRS has not updated its website to reflect the extension. The current fee is $2.45 per individual but could change once the IRS releases new information.
The PCORI fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries.
Employers that fail to pay their PCORI fees, or pay the incorrect amount, could be subject to penalties. PCORI fees are considered an excise tax and are calculated under IRC 6651.
PCORI fees apply to health insurers and plan sponsors offering self-funded health insurance plans. The fee must be submitted via Form 720 by July 31 annually and needs to be paid using the Electronic Federal Tax Systems (EFTPS).
The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing the quality and relevance of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings.
The final regulations specify that PCORI fees also apply to short-term plan of applicable self-insured health plans; that is, plans that run shorter than 12 months in duration. The only exceptions for paying PCORI fees apply to governmental programs and programs established by federal law for providing medical care.
For the employers that must make PCORI fee payments, determining the actual number of individuals that will need to be accounted for in making the payment can be challenging. Consider seeking an outside ACA compliance vendor to ensure you are accurately calculating the amount.
Some ACA compliance vendors will handle PCORI fee determinations and payments in addition to monthly compliance and tracking, at no extra cost. If PCORI fees apply to your organization, contact us to learn about ACA Complete.
If your business needs assistance meeting their ACA filing deadlines this year, contact us to learn about ACA Complete. Our all-in-one service can keep track of your workforce’s employment periods, help establish affordability and file and furnish Forms 1094-C and 1095-C annually.
