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 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, and now apply for the 2020 through 2029 fiscal years.
The Internal Revenue Service (IRS) recently issued Notice 2020-44, that increases the PCORI fee amount to $2.54, which is to be multiplied by the average number of lives covered for plan years ending on or after October 1, 2019 and before October 1, 2020. Additionally, the notice provides transition relief for calculating the average number of lives covered under the plan or policy.
This relief states any reasonable method may be used for calculating the average number of covered lives for plan years ending on or after October 1, 2019 and before October 1, 2020. Therefore, existing methods may still be used, such as the Actual Count Method, Snapshot Method, and Form 5500 Method, as long as the method is applied consistently for the duration of the plan year.
The PCORI fee is filed using IRS Form 720, Quarterly Federal Excise Tax Return, by July 31st of each year. For plans ending in 2019, the next PCORI fee payment is due July 31, 2020. Click here for more information.
The Creative Benefits Team will continue to monitor updates released from the IRS. Questions? Contact the Creative Benefits Team at 866-306-0200 or firstname.lastname@example.org.