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May 23, 2018
Employers who sponsored self-funded medical plans ending sometime during 2017 must report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fees no later than July 31, 2018. Health insurance carriers will pay the fee directly in the case of fully-insured plans. PCORI fees apply to plan years ending after Sept 30, 2012 and before Oct 1, 2019 (including short plan years). The fee is paid using quarterly excise tax Form 720 and must be paid no later than July 31 of the year following the last day of the plan year. If any corrections need to be made for prior years, use Form 720X.
The PCORI fee applies to most group health plans, but not to excepted benefits. The IRS published a chart that describes the different types of plans subject to the fee, which can be found at https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangements. General summary information regarding PCORI fees can be found at https://www.irs.gov/newsroom/patient-centered-outcomes-research-institute-fee.
Payment amounts due in 2018 differ based on the employer’s plan year. The IRS has put together a chart showing applicable fee amounts depending on the plan year end date at https://www.irs.gov/affordable-care-act/patient-centered-outreach-research-institute-filing-due-dates-and-applicable-rates.
For future years, the annual fee will be increased based on the percentage increase in the projected per capita amount of National Health Expenditures (as published by the IRS).
Calculating the Average Covered Lives
Self-funded plans may use one of three methods to determine the average covered lives. Plan sponsors must stick with one method for the entire plan year but are allowed to change from year to year.
Special rules for counting covered lives:
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