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 is calculated based on the average number of lives covered under a policy or plan and is paid annually using IRS Form 720 — Quarterly Federal Excise Tax Return.
Issuers and plan sponsors are generally required to pay the PCORI fees annually by July 31st of each year. However, the PCORI fee payment for plan years ending in 2020 is due August 2, 2021, since July 31, 2021, falls on a Saturday.
PCORI Fee Overview
The ACA created the PCORI to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is funded, in part, through fees paid by health insurance issuers and self-insured health plan sponsors. These fees are widely known as PCORI fees, although they may also be called PCOR fees or comparative effectiveness research (CER) fees.
The PCORI fees were scheduled to expire for plan years ending on or after October 1, 2019. However, a federal spending bill enacted at the end of 2019 extended the PCORI fees for an additional 10 years. As a result, these fees will continue to apply for the 2020-2029 fiscal years.
Using Part II, Number 133 of Form 720, issuers and plan sponsors will be required to report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans.
Keep in mind, issuers or plan sponsors that file Form 720 only to report the PCORI fee will not need to file Form 720 for the first, third or fourth quarter of the year. Issuers or plan sponsors that file Form 720 to report quarterly excise tax liability for the first, third or fourth quarter of the year (for example, to report foreign insurance tax) should not make an entry on the line for the PCORI tax on those filings.
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