Benefits Buzz

2020 PCORI Story

Posted on June 23rd, 2020

The Affordable Care Act (ACA) created a research institute known as the Patient-Centered Outcomes Research Institute (PCORI). The goal of PCORI is to help patients and those who care for them make better-informed decisions about healthcare choices. PCORI is funded in part by fees which are charged to health plans. The following information is designed to help employers understand their upcoming payment obligations.

Fee Amount – The upcoming fee amount depends on when the plan year ended:

  • Plan years ending between January 1, 2019 and September 30, 2019 – $2.45 per covered person
     
  • Plan years ending between October 1, 2019 and December 31, 2019 – $2.54 per covered person

Plan Year Ending Date

This is the last day of the plan year. As an example, a plan that had a July 1, 2018 effective date would have a plan year ending date of June 30, 2019. Alternatively, a plan that had an effective date of January 1, 2019 would have a plan year ending date of December 31, 2019.

Due Date

The fees are due by July 31, 2020 for plan years which ended in 2019. As of the publishing date of this article, there has been no indication that an extension for the filing due date will be provided.

Fully-Insured Health Plans 

The insurance company is responsible for paying the PCORI fee, though most employers with fully-insured health plans are indirectly paying these fees through slightly higher premiums.  

Self-Insured Health Plans (including Level-Funded Health Plans)

The employer is responsible for paying the PCORI fee. The fee is determined based on the average number of covered lives in the plan year ending in 2019. An easy way to calculate the average number of covered lives is using a snapshot method. Under this method, an employer picks one day during each quarter of the plan year (e.g. Jan 1, Apr 1, Jul 1, Oct 1), adds the total number of covered lives (including spouses and dependents) for those days, and divides that number by 4.

Non-Integrated HRAs 

These are Health Reimbursement Arrangements (HRAs) which are not tied to a traditional group health plan and will generally include Qualified Small Employer HRAs (QSEHRAs) and certain Retiree HRAs. The PCORI fee for these types of HRAs should be calculated the same way as the self-insured health plans referenced above. However, if the non-integrated HRA only reimburses dental and/or vision expenses, no PCORI fee applies to the HRA.

Special Rules for Integrated HRAs

These are HRAs that are only available to employees who are also enrolled in a traditional group health plan. Employers that have a fully-insured health plan coupled with an integrated HRA must pay the PCORI fee for the HRA, but they may treat each HRA participant as a single covered life. In other words, the fee generally does not apply to spouses or dependents covered under the HRA. Employers with a self-insured health plan and an integrated HRA may treat the coverage as a single plan assuming both plans have the same plan year.

FSAs

Flexible Spending Accounts (FSAs) are not subject to PCORI fees if they are considered an excepted benefit. To be considered an excepted benefit, employees must be offered a traditional group health plan, and if the employer contributes to the FSA, the employer may not contribute more than (the greater of) $500 or a dollar-for-dollar match of the employee’s contribution.

HSAs

Health Savings Accounts (HSAs) are not subject to PCORI fees.

Dental & Vision Plans

Stand-alone dental and vision plans are not subject to PCORI fees.

Making Payments

Employers should complete Form 720 to make payments. Be sure to use the form version that has a revision date of April 2020. Form 720 and its associated instructions can be found by clicking here

Extension of PCORI Fees

At the end of 2019, Congress passed a spending bill which extends the payment of PCORI fees for 10 additional years. PCORI fees will continue to apply to applicable health plans through the fiscal year ending in 2029 (with final payments now scheduled to be due in 2030).

 

Have a question about PCORI fees?

 

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