IRS Releases New ACA PCORI Fees
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The IRS has released new PCORI rate for health insurance plans that end on or after October 1, 2018 and before October 1, 2019.
PCORI fees are imposed on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established under 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.
IRS Notice 2018-85 states that the PCORI rate per covered individual is $2.45 for organizations with policy and plan years that end on or after October 1, 2018 and before October 1, 2019.
For organizations that have plans and policies that end on or after October 1, 2017 and before October 1, 2018 the applicable PCORI rate per covered individual is $2.39.
The complete IRS Notice 2018-85 can be viewed here.
The PCORI fee on an insurer is calculated off the average number of lives covered under the policy. The fee imposed on sponsors of a self-insured health plan is based on the average number of lives covered under the plan. That means that insurers or plan sponsors must account for all parties enrolled in their respective policy of plan, such as dependents, spouses, retirees, and COBRA beneficiaries. Depending on when the plan starts and ends also can determine the fee per form.
On an annual basis, organizations must pay PCORI fees by July 31 and do so by using Form 720. The IRS states that the fee should be paid using the Electronic Federal Tax Payment Systems (EFTPS).
If your organization is subject to the PCORI fees, make sure you get your information in before July 31st as failure to pay the fee could result in IRS penalties. Since the PCORI fee is considered an excise tax, it is calculated under IRC 6651. Some third-party organizations may include PCORI coordination as a part of their ACA compliance service at no extra charge.
For more information from the IRS on the PCORI fee click here.
To learn more about ACA compliance in 2020, click here.
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