The Affordable Care Act (ACA) requires health insurance issuers and sponsors of self-insured health plans (including qualified Health Reimbursement Arrangements/HRA) to pay Patient-Centered Outcomes Research Institute fees (PCORI fees).

The PCORI fees generally apply to insurance policies providing accident and health coverage and self-insured group health plans. The fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return).

The entity that is responsible for paying the PCORI fees depends on whether the plan is insured or self-insured.

• For insured health plans, the issuer (insurance carrier) of the health insurance policy is required to pay the research fees.
• For self-insured health plans (including HRAs) the research fees are to be paid by the plan sponsor (employer).

PCORI fees will be due by July 31, 2019, for plan years ending in 2018. IRS instructions for filing form 720 include information on reporting and paying the PCORI fees.

Using Part II, Number 133 of Form 720, issuers and plan sponsors will be required to report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans. That number is then multiplied by the applicable rate for that tax year, as follows:

• $2.39 for plan years ending on or after Oct. 1, 2017, and before Oct. 1, 2018
• $2.45 for plan years ending on or after Oct. 1, 2018, and before Oct. 1, 2019

As the fee applies to plan years ending before Oct. 1, 2019, 2018 is the final assessed year for employers with calendar year plans, and the July 2019 payment will be the final payment. For non-calendar year plans, 2020 will be the final payment.

Health insurance issuers have the following options for determining the average number of covered lives:

• The Actual Count Method—This method involves calculating the sum of lives covered for each day of the plan year and dividing that sum by the number of days in the plan year.
• The Snapshot Method—This method involves adding the total number of lives covered on a date in each quarter of the plan year, or an equal number of dates for each quarter, and dividing the total by the number of dates on which a count was made.
• The Form Method—As an alternative to determining the average number of lives covered under each individual policy for its respective plan year, this method involves determining the average number of lives covered under all policies in effect for a calendar year based on the data included in the National Association of Insurance Commissioners Supplemental Health Care Exhibit (Exhibit) that some issuers are required to file (called the member months method). For issuers that are not required to file an Exhibit, there is a similar available method that uses data from equivalent state insurance filings (called the state form method).

Sponsors of self-insured plans (including HRAs) may determine the average number of covered lives by using the actual count method or the snapshot method.

For additional information please refer to the attached compliance bulletin and contact your NEEBCo representative.

FAQs on the PCORI Fee