It’s that time of the year – reporting and paying the PCORI fee!
The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-insured plan sponsors in order to fund comparative effectiveness research. These fees are widely known as Patient-Centered Outcomes Research Institute (PCORI) fees, and were originally scheduled to expire for plan or policy years ending on or after Oct. 1, 2019. However, a federal spending bill enacted at the end of 2019 extended the PCORI fees for an additional 10 years.
Reporting the PCORI Fee on Form 720
Issuers and plan sponsors (in most cases this is the employer) will file Form 720 annually to report and pay the PCORI fee, no later than July 31 of the calendar year following the policy or plan year to which the fee applies. The PCORI fee applies separately to “specified health insurance policies” and “applicable self-insured health plans,” and is based on the average number of lives covered under the plan or policy. For plans ending in 2020, the next PCORI fee payment will be due Aug. 2, 2021, since July 31, 2021, is a Saturday.
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. That number is then multiplied by the applicable rate for that tax year, as follows:
- $2.54 for plan years ending on or after Oct. 1, 2019, and before Oct. 1, 2020.
- $2.66 for plan years ending on or after Oct. 1, 2020, and before Oct. 1, 2021.
The fees for specified health insurance policies and applicable self-insured health plans are then combined to equal the total tax owed.
Please see the following Internal Revenue Service (IRS) resources for more information on the ACA’s PCORI fees:
- Final regulations on the PCORI fees
- PCORI Fee Overview Page
- PCORI Fee: Questions and Answers
- IRS Form 720 and instructions
- PCORI Fee Due Dates and Applicable Rates
If you have any questions about the PCORI reporting requirement or want us to prepare the Form 720, please reach out to your Capital Group Account Management Team.