The Affordable Care Act (ACA) requires health insurance issuers and self-insured plan sponsors to pay Patient-Centered Outcomes Research Institute fees (PCORI fees). Issuers and plan sponsors are generally required to pay the PCORI fees annually by July 31 of each year. However, the PCORI fee payment for plan years ending in 2021 is due August 1, 2022, since July 31, 2022, is a Sunday.
What Is the PCORI Fee?
The PCORI fee is a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI). The institute helps patients, clinicians, purchasers, and policymakers make better-informed healthcare choices by advancing clinical effectiveness research.
PCORI fees under the Affordable Care Act were scheduled to end after September 30, 2019; however, Congress extended these fees to be assessed by the IRS under the Further Consolidated Appropriations Act of 2020 for another ten years, until at least September 30, 2029.
Fully insured plans are to be assessed the applicable PCORI fee amount through their monthly premium payments made to their health insurance carrier. Self-insured plans pay this fee as part of the annual IRS Form 720 filing due by July 31 of each year. Using Part II, Number 133 of Form 720, issuers and plan sponsors are required to report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans. That number is then multiplied by the applicable rate for that tax year ($2.66 for plan years ending on or after October 1, 2020, and before October 1, 2021, or $2.79 for plan years ending on or after October 1, 2021, and before October 1, 2022). The fees for specified health insurance policies and applicable self-insured health plans are then combined to equal the total tax owed.
Next Steps for Employers
Employers with fully insured plans may confirm with their carrier that these fees are being paid through the plan, and employers of certain self-insured health plans should ensure they are paying PCORI fees annually by the applicable due date.