This Client Alert Applies To: Self-Funded Groups
Summer is PCORI season! Under the Affordable Care Act, the PCORI fee was imposed for plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. Unfortunately, in 2020, the PCORI fee was extended for an additional ten years.
While insurers pay the PCORI fee for fully insured plans, employers sponsoring self-funded plans (including “level” self-funded plans) must report and pay the PCORI fee on behalf of the self-funded plan. Self-funded plans must report and pay PCORI by, July 31 of the calendar year following the close of the plan year. The 2022 PCORI filing is due on Monday, July 31, 2023.
PCORI fees are reported and paid using the IRS Form 720, for the second quarter of the calendar year. The current updated form can be found here:
https://www.irs.gov/pub/irs-pdf/f720.pdf
Plan sponsors subject to PCORI fees, but not other types of excise taxes, should file Form 720 only for the second quarter; no filings are needed for the other quarters. The PCORI fee can be paid electronically or mailed to the IRS with the Form 720, using a Form 720-V payment voucher for the second quarter. According to the IRS, the fee is tax-deductible as a business expense.
The chart below shows the applicable PCORI fee and the Form 720 due date. It also contains the quarter-ending date that should be reported on the first page of Form 720 (month and year only, per IRS instructions). In general, there are three methods a self-funded plan may use to determine the average number of covered lives. Detailed information on these methods can be found here:
www.irs.gov/newsroom/patient-centered-outcomes-research-institute-fee.
Remember, if you maintain a Health Reimbursement Account (HRA) in conjunction with an insured plan, your HRA component is a self-funded plan and requires the annual PCORI reporting and payment. (If your HRA is linked to a self-funded health plan, your health plan PCORI reporting and payment covers the HRA).
You can find more information on PCORI at:
www.irs.gov/affordable-care-act/patient-centered-outcomes-research-trust-fund-fee-questions-and-answers
