As a reminder, Patient-Centered Outcomes Research Institute (PCORI) fees are due by July 31, 2020. Originally set to expire in 2019, the PCORI annual filing and fees were reinstated for an additional 10 years, through 2029, as part of budget legislation passed at the end of 2019. Employers that sponsor self-insured group health plans should report and pay PCORI fees using the most recently revised IRS Form 720, Quarterly Federal Excise Tax Return.
Insurance carriers are responsible for paying the PCORI fee on behalf of a fully-insured plan, but employers must pay the fee for any self-insured medical benefits, including general purpose health FSAs and HRAs. For plans that offer a mix of fully-insured and self-insured benefits, both the insurer and the employer must pay fees.
The fee due depends on the date your most recent plan year ended:
The IRS allows plan sponsors to choose one of three alternative methods to determine the average number of covered lives for the year:
In determining the number of covered lives, you must count anyone covered under your self-insured medical programs, including former employees (and their dependents) who participate under COBRA or other post-employment coverage. You can treat all self-insured benefits as a single plan. Also, employers can treat health FSAs and HRAs as providing self-only coverage.
If you have questions about calculating the number of covered lives or addressing any other issues pertaining to PCORI fees or the Affordable Care Act, please contact Norbert Kugele, Stephanie Grant or any other member of Warner‘s Employee Benefits/Executive Compensation Practice Group.