Patient-Centered Outcomes Research Institute (“PCORI”) Fees
Many plan sponsors of self-insured health plans are required to pay PCORI fees by Monday, July 31, 2023. What the plan sponsor pays for PCORI depends upon the plan year. Some will pay the $2.79 per covered life and some will pay the adjusted higher amount per covered life($3.00).
Important: Identify what plans are subject to the requirement and whether the plan is self-insured or fully insured.
What self-insured plans?
- Major medical coverage
- Certain health reimbursement arrangements (HRAs)
- Individual coverage health reimbursement arrangements (ICHRAs)
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 Form 720 and pays the PCORI fee.
Amount of PCORI Fee. The current annual fee adjustments are as follows:
- For plan years that ended on or after October 1, 2022, and before October 1, 2023, (this includes calendar year plans), the fee is $3 per covered life under the plan.
- For plan years that ended on or after October 1, 2021, and before October 1, 2022, the fee is $2.79 per covered life under the plan.
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, for many plans, 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.
If you need assistance in working through the PCORI Fee process, please contact us.
Form 5500 Deadline Fast Approaching
In general, for plans subject to ERISA, Form 5500 filings are due by the last day of the seventh months following the last day of the plan year. For a calendar year plan, the Form 5500 for the 2022 plan year is due on July 31, 2023, unless an extension is requested. Note: Certain small plans are exempt from the filing requirement.
If you need assistance with Form 5500 preparation and/or filing an extension, please contact us.