PCORI fees help fund the Patient-Centered Outcomes Research Institute (PCORI), a group founded in 2010 as a part of the Affordable Care Act (ACA). Learn more about PCORI deadlines, fees, how fees are used, and the future of these payments.
Annual PCORI fees are due on July 31, 2023, for plan years that ended on or after October 1, 2022. Fees are filed using IRS Form 720, which is usually a quarterly return except when filed for PCORI.
The IRS announces updated PCORI rates annually. For plans ending on or after October 1, 2022, but before October 1, 2023, the fee is $3.00 multiplied by the average number of lives covered by the plan as determined by one of three calculation methods (see “Calculating PCORI Fees,” below).
Who Must File
The PCORI fee applies to most self-insured medical plans, including COBRA coverage. Significant exclusions include plans primarily for employees working/residing outside of the United States and plans classified as excepted benefits. Some other exclusions include:
- A healthcare Flexible Spending Account (FSA) plan for which the employer contributes less than $500 annually and offers another medical plan with non-excepted benefits.
- A Health Reimbursement Arrangement (HRA) that reimburses for excepted benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and does not integrate with the group medical plan.
- Health Savings Accounts (HSAs)
The IRS offers a detailed chart on applying PCORI fees to health coverages and arrangements.
Calculating PCORI Fees
Three methods of calculating the average number of lives covered under a plan for a specific plan year are allowed by IRS guidelines: actual count, snapshot, and Form 5500.
- Actual Count Method: Determining the average number by adding the total lives covered for each day of the play year, then dividing by the number of days in the plan year.
- Snapshot Method: Determining the average number of lives based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second, or third month of each quarter. That total is then divided by the number of dates the sponsor included in the count.
- Form 5500 Method: Determining the average number of lives based on the number of participants reported on Form 5500, Annual Return/Report of Employee Benefit Plan, or Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.
How are PCORI fees used?
PCORI is a private non-profit organization that seeks to empower patients and those affecting their healthcare decisions with actionable information about their health and healthcare choices. Their comparative clinical effectiveness research (CER) compares medical treatments, services, or health practices to help people make better healthcare decisions.
PCORI has significant impacts on the healthcare community:
- More than 2,000 research studies and related projects
- 490 PCORI-funded research studies completed with published results
- Has awarded about $4 billion in funding for research studies and associated projects
The Future of PCORI Fees
The Further Consolidated Appropriations Act (2020) extended the PCORI fee for 10 years. As a result, the annual Patient-Centered Outcomes Research Trust Fund fee will continue through at least 2029.
Contact DataPath Administrative Services today for help with PCORI and to ensure you make the filing deadline. Please enter your email (above right) to receive notifications about new blog articles.