Introduction: As part of the Affordable Care Act’s provisions, the Patient-Centered Outcomes Research Institute (PCORI) was established to conduct research on clinical effectiveness and health outcomes. To support the institute’s initiatives, a small annual fee, known as the PCORI Fee, is levied on certain health plans. In this article, we will delve into the details of PCORI Fees, including who is responsible for payment, how they are calculated, and the upcoming compliance deadline.
Who Pays PCORI Fees? Employers who self-insure a Health Plan or a Health Reimbursement Arrangement (HRA), as well as commercial group health insurance providers, bear the responsibility of paying the PCORI Fee. It is essential to note that for self-funded, level-funded, and standalone HRA plans, the fee cannot be remitted by the carrier or invoiced to the clients. Third-Party Administrators are prohibited from fulfilling this obligation on behalf of employers.
Compliance Deadline and Calculation: For Plan Years that concluded in 2022, PCORI Fees are due by July 31, 2023. It is crucial to understand that PCORI Fees are determined based on the end date of the Plan Year and the number of covered lives.
Calculating PCORI Fees: To calculate the PCORI Fee accurately, employers need to consider the average number of covered lives during the applicable Plan Year. This includes employees, dependents, and any other individuals covered by the plan. The IRS provides three available methods to determine the average number of covered lives: the Actual Count Method, the Snapshot Method, and the Form 5500 Method. Employers should select the most suitable method for their specific situation.
Reporting and Remittance: Once the PCORI Fee is calculated, employers are required to report and remit the fee to the IRS. This process involves filing the appropriate forms and providing the necessary payment. The IRS provides clear guidelines and instructions on the reporting and remittance process. It is advisable for employers to consult with tax professionals or benefits administrators to ensure compliance and accurate completion of the required forms.
Advising Clients: As an advisor, it is vital to stay informed about the PCORI Fee requirements to assist clients in meeting their compliance obligations. By understanding the fee schedule, calculation methods, and reporting procedures, you can provide valuable guidance to your clients and help them navigate the complexities associated with PCORI Fee compliance. Ensuring timely payment and accurate reporting can help clients avoid penalties and maintain regulatory compliance.
Conclusion: The PCORI Fee plays a significant role in financing the Patient-Centered Outcomes Research Institute’s critical work on clinical effectiveness and health outcomes. Employers who self-insure a Health Plan or an HRA, as well as commercial group health insurance providers, have the responsibility to pay this fee. By familiarizing yourself with the PCORI Fee requirements, including the compliance deadline, calculation methods, and reporting procedures, you can offer informed advice to your clients. Stay up to date with the latest guidance from the IRS and consult with experts to ensure accurate compliance with the PCORI Fee regulations.
Schedule time on my calendar HERE! for help with compliance!