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Home ACA Compliance PCORI Fees Under ACA Are Increasing in 2024

PCORI Fees Under ACA Are Increasing in 2024

3 minute read
by Maxfield Marquardt

While the busy season of ACA compliance has passed, there are still key items to remain cognizant of. Employers are responsible for fees associated under ACA Provision 6301, known as Patient-Centered Outcomes Research Institute (PCORI) fees.

These fees, which are used to support healthcare research funding, rise each year. For the applicable time period of Sept. 30, 2023 to Oct. 1, 2024, they are rising to $3.22 from $3 the year prior. Is your organization prepared to comply?

What’s Required With PCORI Fees

PCORI was established to evaluate and consider the comparative effectiveness of health outcomes and clinical effectiveness of medical treatments.

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year. The applicable dollar amount is adjusted yearly to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

Fee assessment for 2024 is based on the time period between Sept. 30, 2023 and Oct. 1, 2024. It’s important to note that companies required to make annual PCORI payments need to calculate the fee based on the average number of lives covered by their policies — including dependents, spouses, retirees, and employees participating under COBRA.

New research trust fund fees are due July 31 from issuers of specified health insurance policies and the plan sponsors of applicable self-insured health plans. The fee is paid using Form 720, Quarterly Federal Excise Tax Return. The payment, paid through the Electronic Federal Tax Payment System (EFTPS), should be applied to the second quarter (in EFTPS, select Q2 for the Quarter under Tax Period on the “Business Tax Payment” page).

PCORI fees are a great example of the changing nature of ACA compliance requirements. Initially, these fees were scheduled to expire at the end of 2020. They were extended, though, through Sept. 30, 2029, as part of H.R. 1865 — the Further Consolidated Appropriations Act of 2020. The fees, themselves, have also changed.

Methods for Calculating PCORI Fees

The IRS offers several methods for calculating the average fee associated with the employer responsibility, including:

  • Actual Count Method: Actual number of employees covered on every day of the plan divided by the number of days in the plan year.
  • Snapshot Method: Total number of employees covered on  a specific date during the quarter divided by the number of dates that a count was made.
  • Member Months Method: A calculation based on the member months reported on the NAIC Supplemental Health Care Exhibit that was filed for that calendar year.
  • State Form Method: A form based on the member months method filed in the business’ home state.
  • Form 5500 Method: Total participants covered at the start and end of the plan year divided by two.

Plan sponsors must use the Actual Count Method, Snapshot Method, or Form 5500 Method. Methods available will vary depending on if you’re an issuer of specified health coverage or a plan sponsor.

Addressing Climbing Healthcare Costs

Healthcare costs in the U.S. remain expensive. To wit, Americans spent roughly $4.3 trillion on healthcare, which equates to just under $13,000 per person. The fight to meet the healthcare needs of a growing and aging American population has been a decades-long challenge, including years of intense debate over federal legislation to address American healthcare costs.

Through the ACA’s individual mandate, the U.S. government induced millions of Americans to participate in the health insurance marketplace and created important employer responsibilities to both offer affordable coverage and contribute to healthcare research funding through payment of PCORI fees.

Healthcare is a complicated issue; however, most Americans understand the basic concept that money paid into the healthcare insurance system in the form of premiums contributes to healthcare costs incurred by patients and paid by insurers. What is less familiar to many Americans is the use of certain ACA fees to pay for medical research and development. In other words, this money — PCORI fees — is used not simply to pay for immediate medical needs but in an attempt to make future medical care more cost efficient and effective through healthcare research funding.

Proceed With Confidence 

Trusaic’s technology solves the people and process failures that drive penalties, many of which are created by disjointed, inaccurate, or incomplete data.

From multiple data sources, we consolidate, clean, and transform your data into accurate, actionable intelligence. Clean data, combined with our regulatory expertise, provides the basis for all of our ACA solutions.

If you need help understanding the employer responsibilities associated with the yearly PCORI fee payments, Trusaic can handle this responsibility for you at no additional cost as part of our full-service ACA Complete solution.

PCORI Fees Under ACA Are Increasing in 2024
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PCORI Fees Under ACA Are Increasing in 2024
Patient-Centered Outcomes Research Institute fees required to be paid by employers under the ACA by July 31 increased to $3.22 for 2024. Learn how to comply.
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