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Resurrected PCORI Fee Deadline Coming Soon

A reminder that the Patient-Centered Outcomes Research Institute (“PCORI”) fee for 2019 is due by July 31, 2020.  The Affordable Care Act (“ACA”) imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-funded health plans to help fund the institute.  Originally due to sunset, the PCORI fee was given a stay-of-execution by the Trump Administration with the enactment of the 2020 Further Consolidated Appropriations Act.  The 2020 Further Consolidated Appropriations Act extends the PCORI fee for an additional 10 years until 2029 or 2030, depending upon the end date of the plan year.

The fee amount is calculated using an average number of covered lives under the policy or plan multiplied by the applicable rate that has historically been published in the IRS’s PCORI Filing Due Dates and Applicable Rates Chart.[1]

On June 8, 2020, the IRS issued Notice 2020-44 providing the revised applicable rate for plan years ending between October 1, 2019 and before October 1, 2020.  For affected plans within this timeframe, the new amount will now be $2.54, a 9-cent increase over the previous fee.  The IRS’s PCORI Filing Due Dates and Applicable Rates Chart has not yet been updated to correspond with the new guidance.

The average number of covered lives along with the calculated fee amount must be reported once a year on the second quarter IRS Form 720.

IRS instructions for filing Form 720 include information on reporting and paying PCORI fees.  If paying the PCORI fee through the Electronic Federal Tax Payment System (“EFTPS”), the fee should be applied to the second quarter (in EFTPS, select “Q2” for the Quarter under Tax Period on the “Business Tax Payment” page).

The insurance carrier pays the PCORI fee for fully insured health plans.  Employers with fully insured health plans have no filing requirement; however, insurance carriers do pass along the cost of the fee to employers.  Employers sponsoring self-funded health plans must file Form 720 and pay the PCORI fee directly.

The content herein is provided for educational and informational purposes only and does not contain legal or tax advice.  Please contact our office if you have any questions about how to calculate the PCORI fee, or file Form 720, for your self-funded employee health plan.

Dated:  June 23, 2020

[1]   See the IRS website at https://www.irs.gov/affordable-care-act/patient-centered-outreach-research-institute-filing-due-dates-and-applicable-rates for the applicable rates.

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