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PCORI Fee Reminder: Due July 31st

 June 12 2019     Diane Cross

The deadline for paying the 2018 Patient-Centered Outcomes Research Institute (PCORI) fee to the IRS is quickly approaching. As a reminder, under the ACA, all medical plans are responsible for paying the fee. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. However, when it comes to self-funded plans, including health reimbursement arrangements (unless deemed part of another self-funded plan with the same plan year), the employer/plan sponsor must file the Form 720 and pay the fee directly to the IRS (unless considered an excepted benefit). 

The fee, based on the number of plan participants, varies depending on when the plan year ends. For plan years ending on or after January 1, 2018 and before October 1, 2018, the fee is $2.39 per covered life; and for plan years ending on or after October 1, 2018 through December 31, 2018, the fee is $2.45 per covered life. For example, for plan years that run July 1 through June 30th, the fee is $2.39.  For calendar year plans ending December 31st, the fee is $2.45 per participant for the 2018 filing.  The fee is deemed the responsibility of the employer/plan sponsor and should not be paid from plan assets. 

Fees are reported and paid on Form 720, which is due on July 31st of the calendar year following the last day of the plan year. For example, if your medical plan year ended in 2018, your Form 720 is due by July 31, 2019.  The Form 720 and instructions are available on the IRS website. 

Good news - for some employers, this filing will be their last.  The PCORI fee applies to policy or plan years ending on or after October 1, 2012 and before October 1, 2019.  This means that for calendar year plans, the last filing is due this July.  However, for non-calendar plan years ending January 1, 2019 thru September 30, 2019, the final filing will be for 2019 and is due next year (July 31, 2020). 

We often receive questions regarding Form 720, Part II and more specifically, how to calculate the average number of lives covered. As a reminder, there are four different methods employers may choose from including actual count, snapshot count, snapshot factor, and Form 5500 method. In the instance that an employer sponsors two self-funded health plans (for example, a health plan and a health reimbursement arrangement), each person covered by both plans is only counted once as long the plan year is the same for both plans. If you need assistance, please contact your HORAN account representative and we will assist you.