PCORI fee due July 31

PCORI fee due July 31

Bulletin Type: 
Health Care Reform

Self-insured health and HRA plans must file form; carriers pay fee on behalf of fully insured plans

Employers who are responsible for paying the annual Patient-Centered Outcomes Research Trust Fund fee should use the updated Form 720. The fee is an Affordable Care Act provision to help fund the Patient-Centered Outcomes Research Institute (PCORI), which aims to help patients better understand the prevention, treatment and care options available and the science behind them.

The PCORI fee must be reported annually on the second quarter Form 720 and paid by the due date, July 31. The fee is calculated based on the average number of lives covered under the plan. Employers who file the second quarter Form 720 only to report the PCORI fee are not required to file in other quarters. For fully insured health insurance plans, the fee is paid by the carrier and collected through premiums.

Sponsors of multiple self-insured plans (Example: a health plan, HRA and FSA) with the same plan year can treat those plans as a single plan for purposes of calculating the fee. A special rule also exists for plan sponsors of both HRAs and non-excepted health FSAs (most health FSAs fall into this category) to count only employee-participants as covered lives, and not spouses or dependents whose expenses may be reimbursable under the respective plans.

The fee (see schedule) is based on plan years. Generally, plan sponsors of applicable self-insured health plans must use one of three alternative methods to determine the average number of lives covered during the plan year.

Calculation methods:

Actual count

Determined by adding the total number of lives covered for each day of the plan year and dividing that total by the number of days in the plan year. Snapshot count Determined by adding the total number of lives covered on one date in each quarter of the plan year (or more dates if an equal number of dates are used for each quarter) and dividing the total by the number of dates on which a count was made. The final regulations now allow the dates used in the second, third and fourth quarters to fall within three days of the corresponding first date quarter to allow for weekends and holidays. (A variation of this method, called the snapshot factor method, is the sum of the number of participants with self-only coverage on designated dates added to the number of participants with coverage other than self-only multiplied by 2.35).

Form 5500

Determined based on the number of reportable participants for the Form 5500, Annual Return/Report of Employee Benefit Plan, that is filed for the plan for that plan year. The final regulations clarify that the Form 5500 method will not be available to sponsors whose Form 5500 is filed on an extended deadline that is later than the July 31 due date for the PCORI fee.

For self-only coverage, determine the average number of participants by combining the total participants at the beginning of the plan year with the total participants at the end of the plan year as reported on the Form 5500, and then divide by 2. In the case of plans with self-only and other coverage, the average number of total lives is the sum of total participants covered at the beginning and the end of the plan year, as reported on the Form 5500.

Employers may want to refer to the IRS instructions, summary chart and Q&A before completing the form.

For assistance with Form 720, contact your Bukaty Benefits consultant at 913.345.0440