IRS Releases Updated PCORI Fees

 November 12 2018     Diane Cross

Recently, the IRS released Notice 2018-85 providing the updated Patient-Centered Outcomes Research Institute (PCORI) Fee, which is adjusted for inflation annually. For health plan years that end on or after October 1, 2018 and before October 1, 2019, the dollar amount to calculate the PCORI fee is $2.45 per covered life (up from $2.39 for plan years ending on or after October 1, 2017 and before October 1, 2018). 

As a reminder, all medical plans are responsible for paying the PCORI fee to the IRS as required by the Affordable Care Act (ACA). For a fully-insured plan, the insurance carrier pays the fee on behalf of the policyholder.  However, for self-funded plans, the employer/plan sponsor must file the Form 720 and pay the fee to the IRS directly (unless the plan is considered an excepted benefit). Note this includes health reimbursement arrangements (HRAs), unless the HRA is deemed part of another self-funded plan with the same plan year.  The fee, based on the number of plan participants, varies depending on when the plan year ends.  For example, for plan years that run July 1 through June 30th the fee is $2.39 per participant; however, for calendar year plans ending December 31st the fee is $2.45 for the filing due in 2019. 

Fees are reported and paid on Form 720 (see related instructions for reference), which is due on July 31st of the calendar year following the last day of the plan year.  Important to note, the fee applies to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019.  With the program ending in 2019, PCORI fees will not apply for plan years ending after September 30, 2019.  For more information about the PCORI fee, see our previous blog post.  Please contact your HORAN account representative with any questions.