PCORI Fee Update

Although a number of Affordable Care Act (ACA) taxes/fees were repealed by the 2019 SECURE Act (see – https://smstevensandassociates.com/aca-taxes-repealed/), the PCORI fee (also known as the Comparative Effectiveness Research Fee (CERF)) was not, and was in fact extended for an additional 10 years.  So in addition to plan years ending prior to October 1, 2019, the PCORI fee will now apply to plan years ending in the years 2020-2029.

The ACA created the PCORI fee as a way to fund and conduct research to compare the effectiveness of medical services used to treat, manage, diagnose, and prevent injuries and illnesses.  PCORI fees are generally collected and remitted on behalf of fully insured plans, by insurance companies;  but required to be remitted by employers with self-funded plans, including Health Reimbursement Arrangements (HRA), on their quarterly IRS form 720.  See our previous blog for a list of affected plans – https://smstevensandassociates.com/to-pcori-feeor-not-to-fee-that-is-the-question-2/

The PCORI fee due this year (i.e., July 31, 2020) for plan years ending between January 2019 and September 2019 is $2.45 per covered member/plan participant.

As a reminder, the IRS offers three different methods for calculating PCORI fee/CERF:

  1. Actual Count Method:  Add the totals of lives covered for each day of the plan year and dividing that total by the total number of days in the plan year.
  2. Snapshot Method:  Based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
  3. Form 5500 Method:  Based on the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

Here’s a link to the IRS resource page addressing the PCORI fee – https://www.irs.gov/newsroom/patient-centered-outcomes-research-institute-fee