Be Prepared: PCORI Fees Due Soon

By  Dave Barchet

The Affordable Care Act developed the Patient-Centered Outcomes Research Institute (PCORI) whose mandate is to improve the quality and relevance of evidence available to help patients, clinicians, caregivers, employers, insurers and policy makers make informed health decisions. In order to fund the comparative effectiveness research, the ACA imposes a fee to be paid once a year to the IRS. This year the due date is August 1, 2016 (the filing is usually due on July 31, except when that date falls on a Saturday, Sunday or legal holiday).

If your plan is fully insured, then the Health Insurer is responsible for paying the fee. For self-insured plans, the Plan Sponsor (generally the employer) is responsible for paying the PCORI fee.

For self-insured health plans, the fee is calculated using the average number of total lives covered by the plan (both employees and dependents). The requirement for the calculation of the total fee is to use one of the following three calculation methods:

Actual count method
Snapshot method
Form 5500 method

Plan Sponsors should review all three methods to determine the lowest amount to be paid. The amount to pay depends on your plan year end as outlined below:

Plan years ended January-September 2015: $2.08 per
    covered life (including spouses and children)
Plan years ended October-December 2015: $2.17 per
    covered life (including spouses and children)

The PCORI fee is filed using IRS Form 720 (https://www.irs.gov/pub/irs-pdf/i720.pdf). The payment voucher (720-V) should indicate that the tax period for the fee is for the "second quarter" to avoid the IRS's software system from marking this as a tardy filing notice.

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