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Annual PCORI Fees Due July 31, 2017

Posted on May 16th, 2017

The fifth installment of the Patient-Centered Outcomes Research Institute (PCORI) fees will be due on July 31, 2017. As its name suggests, PCORI is a research institute, and it was created by the Affordable Care Act (ACA) to improve clinical effectiveness. It is partially funded by fees charged to health plans.
The following list contains information and some reminders about the upcoming PCORI fee that is due:
  • The fee is paid on the average number of covered lives for the plan year ending in 2016.
  • The IRS has several different methods that can be used to calculate the average number of covered lives. The "snapshot method" is one of the most popular methods, whereby the employer picks one day during each quarter of the plan year, adds the total number of covered lives for those days, and divides that number by 4.
  • Plan years ending between 1/1/16 and 9/30/16: Fee is $2.17 per covered life.
  • Plan years ending between 10/1/16 and 12/31/16: Fee is $2.26 per covered life.
  • The fee is paid by the insurance company for fully insured plans.
  • The fee is paid by the employer for self-funded plans via Form 720.
  • Healthcare Flexible Spending Accounts (FSAs) that are considered excepted benefits aren't subject to the fee. Most FSAs are considered excepted benefits.
  • Employers with a fully insured major medical plan and an integrated Health Reimbursement Arrangement (HRA) are subject to paying the fee on 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 major medical plan and an integrated HRA may treat the coverage as a single plan assuming they have the same plan year.
  • Stand-alone dental/vision plans, including HRAs, are not subject to the fee.
To obtain a copy of Form 720 and its instructions, please click here.

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