Overview of PCORI Fees: 2024 ACA Update

Compliance, Employee Benefits

PCORI Fee Overview

Patient-Centered Outcomes Research Institute (PCORI) fee is a temporary fee on both fully insured and self-insured health care benefits that apply for the policy years between 2012 and 2029. The fees are intended to fund the Patient Centered Outcomes Research Institute, which is an independent, non-profit organization created under the Affordable Act to conduct research for patients and caregivers on enhancing health care outcomes.

The PCORI fee is paid annually and is due by July 31st. For a plan year ending between January 1, 2023, and September 30, 2023, the $3.00 fee is due July 31, 2024. For a plan year ending between October 1, 2023, and December 31, 2023, the $3.22 fee is due by July 31, 2024. Fees are due on July 31 of the year following the last day of the policy or plan year. Please see attached schedule for specific due dates as it relates to the plan year.

Fees are paid on IRS Form 720 which is a quarterly excise tax return form. The fees are paid for the second quarter of each year. More information about Form 720 is located here: https://www.irs.gov/forms-pubs/about-form-720.
It is important to use the form with the correct fees listed, which may not be available until closer to the due date of July 31.

The Fees:

Every year the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

Overall rules for fees:

Fees are generally imposed on either the issuer of a specified health insurance policy (fully insured plans, on the carrier) or plan sponsors (employers) of an applicable self-insured health plan. For self-insured plans maintained by two or more employers, the plan sponsor responsible for paying the fee is the entity identified as the plan sponsor by the terms of the document under which the plan is operated. If no plan sponsor is identified, the plan sponsor responsible for the fee is each employer that maintains the plan.

How the fees apply to different plans:

  • Fully Insured Plans: Fees are imposed on “specified health insurance” policies. “Specified health insurance” policies include any prepaid health coverage arrangement if fixed payments or premiums are received as consideration for a person’s agreement to provide or arrange for the provision of accident or health coverage to residents of the United States.
  • Self-Insured Plans: Fees are imposed on “plan sponsors”. The “plan sponsor” is the employer in the case of a plan established or maintained by a single employer and the employee organization in the case of a plan established or maintained by an employee organization. In the case of a plan established or maintained by two or more employers or jointly by one or more employers, a MEWA (Multiple Employer Welfare Arrangement) or a VEBA (Voluntary Employee Beneficiary Association), the plan sponsor is the association, committee, joint board of trustees or other similar group of representatives of the parties who wish to establish or maintain the plan.
    • Level-Funded Plans: Plan sponsors are encouraged to check with the carrier to determine the responsibility for paying the fees.
  • Excepted Benefits: Certain benefits are not subjected to the PCORI fee, because they are “excepted” or not-essential health benefits. Examples would include workers compensation insurance and stand-alone dental or vision programs.
  • HRAs & FSAs: A Health Reimbursement Account (HRA) is not subject to a separate fee if the HRA is integrated with another applicable self-insured health plan that provides major medical coverage, provided that the HRA and the other plan are established and maintained by the same plan sponsor. However, an HRA that is integrated with a fully insured plan is treated as an “applicable self-insured health plan” and the plan sponsor (employer) would be subject to the fee on the HRA. The issuer of the fully insured plan that is integrated with the HRA would be subject to the fee on the fully insured health plan.“Flexible Spending Accounts” (FSAs) that satisfy the requirements of an “excepted benefit” are excluded from the definition of “applicable self-insured plan” and are NOT subject to the fees. FSAs that are not excepted benefits are subject to the fees.

    Because it is difficult to determine the number of “covered lives” under FSAs and HRAs, the regulations allow the plan sponsor to assume one covered life for each employee with an HRA and for each employee with a health FSA that is not an excepted benefit.

  • EAPs, Disease Management & Wellness Programs: Employee Assistance Programs (EAPs), Disease Management Programs and Wellness Programs are excluded from the definition of “applicable self-insured plan” and the fee would not apply, but only if these programs do not provide significant benefits in medical care or treatment.

Determining Fee Amounts

Fees are assessed on the number of covered lives on the plan for the plan year. The regulations provide different methods for determining the number of covered lives as outlined below. Please be sure to run numbers based on each method as one method might be more advantageous than the others.

  • Actual count: Add the number of covered lives for each day of the plan year and divide by the number of days.
  • Snapshot: Add the total of covered lives on a date during the first, second or third month of each quarter of the plan year and divide by 4. All dates used must fall within the same plan year.
  • Snapshot Factor: In the case of self-only and other than self-only coverage (family, employee + one or employee + children) determine the sum of: (1) the number of participants with self-only coverage, and (2) the number of participants with other than self-only coverage multiplied by 2.35.
  • Form 5500: Use the counts from your Form 5500 by adding the number of participants at the beginning of the year and the number of participants at the end of the year.
Plan YearPayment AmountDue Date
February 1, 2022 – January 31, 2023$3.00July 31, 2024
March 1, 2022 – February 28, 2023$3.00July 31, 2024
April 1, 2022 – March 31, 2023$3.00July 31, 2024
May 1, 2022 – April 30, 2023$3.00July 31, 2024
June 1, 2022 – May 31, 2023$3.00July 31, 2024
July 1, 2022 – June 30, 2023$3.00July 31, 2024
August 1, 2022 – July 31, 2023$3.00July 31, 2024
September 1, 2022 – August 31, 2023$3.00July 31, 2024
October 1, 2022 – September 30, 2023$3.00July 31, 2024
November 1, 2022 – October 31, 2023$3.22July 31, 2024
December 1, 2022 – November 30, 2023$3.22July 31, 2024
January 1, 2023 – December 31, 2023$3.22July 31, 2024

The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.

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