What is PCORI?
The Patient Centered Outcomes Research Institute (PCORI) is an organization established by the Patient Protection and Affordable Care Act (PPACA) aimed at giving patients a better understanding of the prevention, treatment, and care options available, and the science that supports those options. The final rule issued by the IRS, applies to both fully insured and self-insured health plans ending on or after October 1, 2012 and before October 1, 2019. To fund the PCORI, the PPACA imposes a fee on health insurers and employers who sponsor self-insured health plans.
What Plans Are Subject to PCORI Fees?
Generally, any plan established or maintained by one or more employers for their employees that provides accident or health coverage, any portion of which is provided other than through an insurance policy, is a self-insured plan subject to PCORI fees.
- Medical plans
- Prescription Drug Plans
- Self-insured dental or vision plans, if provided without a separate election or premium charge
- Health Reimbursement Arrangements (HRAs)
- Retiree-only health plans (even though some are exempt from other PPACA mandates)
PCORI fees do not apply to excepted benefits:
- Separately insured dental or vision plans
- Self-insured dental or vision plans, if subject to separate coverage elections and employee contributions
- Expatriate coverage provided primarily for employees who work and reside outside of the U.S.
- Health savings accounts (HSAs)
- Most flexible spending accounts (FSAs)
- Employee assistance programs (EAPs), wellness programs and disease management programs that do not provide “significant benefits in the nature of medical care or treatment.”
How to Calculate the Average Number of Covered Participants?
The IRS recommends four different methods for calculating the PCORI fee. The simplest and best method is:
Sum of covered lives on one or more dates in each quarter divided by the applicable number of dates used. For example, if you tally the number of covered lives on the 1st day of each quarter, you would then divide that total by four.
Form 720 – Paying the PCORI Fees
Sponsors of the qualified plans will be required to file IRS Form 720 and pay the accompanying Patient Centered Outcome Research Institute (PCORI) Fee by July 31, 2015. With respect to fully insured group health plans, the fee will be paid by the applicable insurance company. With respect to self-funded group health plans and HRA plans, the plan sponsor is responsible for payment.
The fee is $2 per plan participant with plan year end date between October 1, 2013 and September 30, 2014. Plan years ending between October 1, 2014 and September 30, 2015, the fee is $2.08 per plan participant.
The filing deadline for Form 720 is July 31, 2015.
For additional information on this topic, please visit the IRS site at www.irs.gov