The Affordable Care Act (ACA) imposes a fee on health insurance issuers and plan sponsors of self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). The PCORI fee was originally scheduled to expire for plan or policy years ending on or after October 1, 2019. However, a federal spending bill enacted in 2019 extended the PCORI fees for an additional 10 years.
This resulted in the Internal Revenue Service (IRS) issuing Notice 2020-84 to increase the PCORI fee amount for plan years ending on or after October 1, 2020, and before October 1, 2021, to $2.66 multiplied by the average number of lives covered under the plan.
PCORI fees are reported and paid annually using IRS Form 720, Quarterly Federal Excise Tax Return, by July 31st of each year. Because July 31, 2021 falls on a Saturday, plans ending in 2020 will have a PCORI fee payment deadline of August 2nd, 2021.
Due to the unanticipated reimplementation of the PCORI fee, the IRS provided transition relief for 2020 PCORI fee calculations; which allowed issuers and plan sponsors to use any reasonable method for calculating the average number of covered lives under the plan or policy, in addition to existing methods, so long as it was applied consistently during the plan year.
However, the relief was not extended for the 2021 plan year — which means plans and issuers must use one of the existing methods for calculating the PCORI fee for 2021.
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The Creative Benefits Team will continue to monitor updates released by the IRS. Questions? Contact us at 866-306-0200 or email@example.com.