2023 The Patient-Centered Outcomes Research Institute (PCORI) Fee

What is a PCORI Fee?

The Patient-Centered Outcomes Research Institute (PCORI) fee, which is also referred to as the Comparative Effectiveness Fee, initially applied from 2012 to 2019. However, in December 2019, the Further Consolidated Appropriations Act, 2020 extended the fee to 2029. The fee is due based on plan/policy years ending on or after October 1, 2012, and before October 1, 2029.  The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. 

Who pays the fee?

The fee will be calculated and paid by the insurance carrier for fully insured plans. The plan sponsor of self-funded & level-funded plans (which is usually the employer) must file and pay the fee for those plans. Health Reimbursement Arrangements (HRAs) are considered self-funded plans, so employers will need to file for those plans, even if the insurer (plan sponsors including insurance companies for fully insured benefit plans) is filing for the related fully insured medical plan. If multiple employers participate in the plan, each must file separately unless the plan document designates one of them as the plan sponsor.  MEC plans (sometimes referred to as “skinny plans”) are also considered self-funded plans, so employers will need to file for those plans.

The fee is based on covered lives. So, employees, retirees and COBRA participants and their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA – dependents covered by these accounts can be excluded.

How to calculate the PCORI fee?

There are three options available for calculating the fee:

• Actual count method – The total number of lives covered (employees and their covered family members) on each day of the plan year, divided by the total number of days in the plan year.
• Snapshot method – The plan determines the number of covered lives on the same day (plus or minus three days) of each quarter or month and averages the result. (This method also allows the plan to count employees and retirees with self-only coverage separately from those with dependent coverage, and then multiply the count of employees and retirees who have dependent coverage by 2.35 to approximate the number of covered dependents, rather than actually counting them.)
• Form 5500 method – The plan determines the number of participants at the beginning and end of the plan year as reported on Form 5500. If dependents are covered, the plan adds the participant count for the start and the end of the plan year to get the total reportable lives. If dependents are not covered, the plan adds the participant count for the start and the end of the plan year and averages the result (this method cannot be used by insurers). Form 5500 must be filed by July 31 to use this option.

The same method must be used throughout a reporting year, but it may be changed from year to year.
The initial fee was $1.00 per covered life in the first year the fee was in effect.  The Fee is adjusted each year for medical inflation.  The plan sponsor must report and pay the fee on IRS Form 720 each July 31. This will be an annual filing, even though Form 720 is generally filed quarterly. The plan sponsor may file electronically or with paper.

The following will help you determine what your applicable dollar amount will be:

• Plan Years Ending January 2022 – September 2022 = $2.79 per covered life (including spouses/dependents)
• Plan Years Ending October 2022 – December 2022 = $3.00 per covered life (including spouses/dependents)

The fees are due at the same time as the Form 720 is filed.  The form and instructions can be found at: About Form 720, Quarterly Federal Excise Tax Return | Internal Revenue Service (irs.gov)

If you need the fee schedule for any period prior to those listed above, please contact us at Compliance@brinsonbenefits.com