June 09, 2020
On June 8, 2020, the Internal Revenue Service (IRS) issued Notice 2020-44 in which it announced the Patient-Centered Outcomes Research Institute (PCORI) Fee for plan years ending on or after October 1, 2019 and before October 1, 2020 is $2.54 per average number of covered lives. This is an increase over the previous year's fee of $2.45 that applies to plan years ending on or after October 1, 2018 and before October 1, 2019.
The PCORI Fee first became effective beginning with plan years ending on or after October 1, 2012 (generally for plan years beginning November 1, 2011 and ending October 31, 2012), and was initially intended to be assessed annually for seven years, however, as a result of legislation passed last year, known as the Further Consolidated Appropriations Act of 2020, the PCORI Fee was extended for another 10 years. As a result, the Fee will continue to be imposed through the 2029 plan year.
The PCORI Fee is considered an excise tax that must be reported on IRS Form 720 for the second quarter reporting period. It is due by July 31 of the year following the last day of the plan year being reported on. Payment is to be remitted along with the Form 720 filing and the amount will vary depending on the plan year. Employers who sponsor self-funded plans are responsible for paying this fee, as are insurers of most fully insured policies.
The Fee is not assessed against most healthcare flexible spending accounts (unless they do not meet the requirements for being an excepted benefit under the ACA), as well as employee assistance, disease management, and wellness programs not providing significant medical care benefits, and plans covering primarily employees working outside the United States. A plan sponsor is also able to treat multiple self-insured plans with the same plan year as a single plan for reporting and payment purposes. For example, a plan sponsor with a self-insured plan providing major medical benefits and a separate self-insured plan with the same plan year that provides prescription drug coverage may be considered as a single plan so that the same covered life under each plan is counted only once. Note however, plan sponsors that have established a health reimbursement account (HRA) integrated with their fully-insured medical plan may be subject to a separate PCORI Fee assessment for that HRA.
The following table depicts the fee amount payable by the July 31, 2020 filing and payment deadline:
|Plan Year Ending||Fee Amount|
|January 31, 2019||$2.45 per average number of covered lives|
|February 28, 2019||$2.45 per average number of covered lives|
|March 31, 2019||$2.45 per average number of covered lives|
|April 30, 2019||$2.45 per average number of covered lives|
|May 31, 2019||$2.45 per average number of covered lives|
|June 30, 2019||$2.45 per average number of covered lives|
|July 31, 2019||$2.45 per average number of covered lives|
|August 31, 2019||$2.45 per average number of covered lives|
|September 30, 2019||$2.45 per average number of covered lives|
|October 31, 2019||$2.54 per average number of covered lives|
|November 30, 2019||$2.54 per average number of covered lives|
|December 31, 2019 (calendar year plans)||$2.54 per average number of covered lives|
Plan sponsors of self-insured plans may use one of three methodologies for determining the average number of covered lives under the plan for the plan year:
For More Information
For further information, including links to the final PCORI regulations, questions and answers regarding the PCORI Fee, a chart depicting the types of insurance coverage subject to the fee, and the Form 720, along with instructions, please visit the IRS website.
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or firstname.lastname@example.org
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