Introduction to PCORI Fee
The Patient-Centered Outcomes Research Institute (PCORI) fee is a requirement under the Affordable Care Act (ACA) for certain health insurance plans, including self-insured plans. The fee is used to fund research that helps patients and healthcare providers make informed decisions about medical treatments.
The PCORI fee applies to plan years ending on or after October 1, 2012, and before October 1, 2019. However, the fee was extended through 2029 as part of the Further Consolidated Appropriations Act of 2020.
Determining the PCORI Fee Due Date
The PCORI fee is due by July 31 of each year, following the last day of the plan year. For example, if the plan year ends on December 31, the fee is due by July 31 of the following year. It is essential to note that the due date is not related to the tax filing deadline.
Plan sponsors must report and pay the PCORI fee using Form 720, Quarterly Federal Excise Tax Return. The fee is reported on Line 133 of the form, and the payment is made using a check or electronic funds transfer.
Calculating the PCORI Fee
The PCORI fee is calculated based on the average number of lives covered under the plan. The fee is $2.45 per covered life for plan years ending on or after October 1, 2018, and before October 1, 2019. For plan years ending on or after October 1, 2019, the fee is $2.54 per covered life.
Plan sponsors can use one of three methods to calculate the average number of lives covered: the actual count method, the snapshot method, or the Form 5500 method. The chosen method must be used consistently for all plans.
Payment Methods for PCORI Fee
Plan sponsors can pay the PCORI fee using a check or electronic funds transfer (EFT). The check should be made payable to the United States Treasury and include the plan sponsor's name, address, and Employer Identification Number (EIN).
For EFT payments, plan sponsors can use the Electronic Federal Tax Payment System (EFTPS) or a commercial payment processor. It is essential to ensure that the payment is made on time to avoid penalties and interest.
Consequences of Late Payment
Plan sponsors who fail to pay the PCORI fee on time may be subject to penalties and interest. The penalty for late payment is 5% of the unpaid amount for each month or part of a month, up to a maximum of 25%. Interest is also charged on the unpaid amount, starting from the original due date.
To avoid penalties and interest, plan sponsors should ensure that the PCORI fee is paid on time and that all required information is reported accurately. It is also essential to maintain records of the payment and calculation of the fee.
Frequently Asked Questions
What is the purpose of the PCORI fee?
The PCORI fee funds research to help patients and healthcare providers make informed decisions about medical treatments.
Which health insurance plans are subject to the PCORI fee?
The PCORI fee applies to self-insured plans and certain other health insurance plans, including those with a plan year ending on or after October 1, 2012.
How is the PCORI fee calculated?
The PCORI fee is calculated based on the average number of lives covered under the plan, using one of three approved methods.
What is the due date for the PCORI fee?
The PCORI fee is due by July 31 of each year, following the last day of the plan year.
What are the consequences of late payment of the PCORI fee?
Late payment of the PCORI fee may result in penalties and interest, with a penalty of 5% of the unpaid amount for each month or part of a month.
How can plan sponsors pay the PCORI fee?
Plan sponsors can pay the PCORI fee using a check or electronic funds transfer, and must report the fee on Form 720.