Patient-Centered Outcomes Research Institute (“PCORI”) Fees
Many plan sponsors of self-insured health plans are required to pay PCORI fees by August 2, 2021. Specifically, the fees must be paid by this date for any plan year ending in 2020.
| Important: Identify what plans are subject to the requirement and whether the plan is self-insured or fully-insured. The insurance carrier is responsible for fully insured plans. The plan sponsor (typically the employer) is responsible for self-insured plans. |
What self-insured plans?
See the chart on the IRS website regarding the application of PCORI fees to common types of health coverage or arrangements: https://www.irs.gov/newsroom/application-of-the-patient-centered-outcomes-research-trust-fund-fee-to-common-types-of-health-coverage-or-arrangements
Form 720 for Self-Insured Plan: The plan sponsor must file Form 720 and pay the required PCORI fee directly to the Internal Revenue Service (IRS). Third-party administrator (TPAs) cannot pay the fee on behalf of a plan. The Form 720 is available here: https://www.irs.gov/pub/irs-pdf/f720.pdf. Instructions for the form are available here: https://www.irs.gov/instructions/i720.
Form 720 for Fully Insured Plan: The issuer of a “specified health insurance policy” must file Form 720 and pay the required PCORI fee directly to the IRS. Consequently, the insurance carrier files the PCORI fee.
Amount of PCORI Fee: The PCORI fee is equal to $2.66 per covered life for each plan or policy year ending on or after October 1, 2020, and before October 1, 2021. Note, this amount is an increase from the $2.54 per covered life for the prior period.
In general, a self-insured plan must use one of three ways to determine the number of covered lives for purposes of PCORI fees: (1) the actual count method, (2) the snapshot method, or (3) the Form 5500 method. It is important to note, COBRA qualified beneficiaries, retirees, and former employees must all be included as covered lives. However, for HRAs and ICHRAs, covered lives means the number of participants with an account.
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Form 5500 Deadline Fast Approaching
In general, for plans subject to ERISA, Form 5500 filings are due seven months from the last day of the plan year. Note: Certain small plans are exempt from the filing requirement.
For a calendar year plan, the Form 5500 for the 2020 plan year is due on July 31, 2021 (because July 31, 2021, is on a Saturday, the Form 5500 is the following business day, which is August 2, 2021), unless an extension is requested. If you need assistance with Form 5500 preparation and/or filing an extension, please contact us.
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