The Internal Revenue Service (IRS) has issued Notice 2024-83 to increase the Patient-Centered Outcomes Research Institute (PCORI) fee amount for plan years ending on or after Oct. 1, 2024, and before Oct. 1, 2025. The updated PCORI fee amount is $3.47 multiplied by the average number of lives covered under the plan.
For plan years that ended on or after Oct. 1, 2023, and before Oct. 1, 2024, the PCORI fee amount is $3.22 multiplied by the average number of lives covered under the plan.
Key Facts
Covered Plans
The PCORI fees generally apply to insurance policies providing accident and health coverage and self-insured group health plans.
Applicability Dates
The PCORI fee applies to plan or policy years ending on or after Oct. 1, 2012, and before Oct. 1, 2029.
Payment Deadline
PCORI fees are due for plan or policy years ending in 2024 on July 31, 2025.
Applicability of PCORI Fee
The PCORI fee was created by the Affordable Care Act (ACA) and first applied for plan or policy years ending on or after Oct. 1, 2012. The fee is imposed on health insurance issuers and self-insured plan sponsors to fund comparative effectiveness research. The PCORI fee was originally scheduled to expire in 2019. However, a federal spending bill extended the PCORI fee for an additional 10 years. As a result, the PCORI fee will apply through the plan or policy year ending before Oct. 1, 2029.
Payment Deadline
PCORI fees are reported and paid annually on IRS Form 720 (Quarterly Federal Excise Tax Return). These fees are due each year by July 31 of the year following the last day of the plan year. For plan years ending in 2024, the PCORI fee is due by July 31, 2025. Employers with self-insured health plans should have reported and paid PCORI fees for 2023 by July 31, 2024.
Calculating the PCORI Fee
The PCORI fees are calculated based on the average number of covered lives under the plan or policy. This generally includes employees and their enrolled spouses and dependents, unless the plan is an HRA or FSA. Final rules outline a number of alternatives for issuers and plan sponsors to determine the average number of covered lives.
IRS Resources
The IRS provides the following resources on PCORI Fees:
- PCORI Fee Overview Page
- PCORI Fee: Questions and Answers
- PCORI Fee Due Dates and Applicable Rates
- Chart: Application of the PCORI Fee to Common Types of Health Coverage or Arrangements
Conclusion
Health plan sponsors of insured plans can plan on these fees being added to your rate, while self-funded plans will need to submit the fee by July 31, 2025. Leavitt Group clients may use the Leavitt Group PCORI calculator to double check the fees due, especially if an off-calendar plan year and two separate fees are due for part of the year. See PCORI Fee Calculator | Leavitt Group Enterprises. Also see the prior Leavitt Group article Health Plans Must Remit PCORI Fees by July 31, 2024 | Leavitt Group News & Publications. Remit the fee using Form 720 or online About Form 720, Quarterly Federal Excise Tax Return | Internal Revenue Service. Leavitt Group clients can work with their Leavitt Group Trusted Advisor for additional details and inquiries related to PCORI fees.
Source: Zywave. Republished with permission. Some content by Leavitt Group.