The final piece of the ACA’s Patient-Centered Outcomes Research Institute (PCORI) fee puzzle has fallen into place for employers, plan sponsors, and insurers who have been patiently waiting. The IRS announced the new fee for plan years ending between October 1, 2019 and before October 1, 2020. The new fee required to be reported and paid on IRS Form 720 is $2.54 per covered life.
If you recall, this July 31st was originally intended to be the final filing date for employers with plan years ending between January 1, 2019, and before October 1, 2019, as the fee was intended to sunset. However, the SECURE Act passed late in December extended the fee for an additional 10 years. This means that employers with a plan year ending between October 1, 2019, and December 31, 2019, also have a filing coming due. However, until yesterday, the IRS kept us all in suspense wondering what fee should be reported and paid for those plans.
This chart summarizes the fees.
|Plan Year Ending Date||Filing Due Date||PCORI Fee per Covered Life|
|January 1, 2019 –
September 30, 2019
|July 31, 2020||$2.45|
|October 1, 2019 –
December 31, 2019
|July 31, 2020||$2.54|
As a reminder, all medical plans are responsible for paying PCORI fees. The insurer pays the fee on behalf of the policyholder when a plan is fully-insured. The employer/plan sponsor must file the Form 720 and pay the fee for self-funded plans. This includes health reimbursement arrangements that are integrated with fully-insured medical plans. However, health reimbursement arrangements (integrated with a self-funded medical plan with the same plan year) and excepted benefits are exempt.
There are four different methods employers may choose to use to for purposes of reporting and paying the PCORI fee: actual count, snapshot count, snapshot factor, and Form 5500 method. But, for plan years ending between October 1, 2019, and October 1, 2020, the IRS has granted transition relief. The transition relief allows plan sponsors to use any “reasonable method” to calculate the average number of covered lives for purposes of reporting and pay the fee as long as that method is used consistently for the duration of the year.
More detailed information regarding PCORI fees may be found on the IRS website.
Please contact your HORAN representative with questions.