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PCORI Fees Due for Health Plans Including some HRAs and FSAs

Posted on June 23rd, 2016

The fourth installment of the Patient-Centered Outcomes Research Institute (PCORI) fees will be due on July 31, 2016.

As its name suggests, PCORI is a research institute, and it was created by the Affordable Care Act (ACA) as a way 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 2015.
  • 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 1/1/15 and 9/30/15: Fee is $2.08 per covered life.
  • Plan years ending between 10/1/15 and 12/31/15: Fee is $2.17 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 for paying the fee on the HRA, but they may treat each HRA participant as a single covered life.
  • 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.

If you are subject to making a PCORI fee payment on a self-insured health plan, including an applicable FSA or HRA, you may access the most recently updated version of Form 720 by clicking here.

Additionally, click here for instructions on completing Form 720.

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The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.   

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