- On December 10, 2024
- PCORI
The Affordable Care Act created an annual assessment of health insurance carriers and self-insured group health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). Often referred to as the PCORI fee, health insurance carriers pay it on behalf of their fully insured group health plan clients. However, employers who offer self-funded and level-funded health plans, including health reimbursement arrangements and flexible savings accounts that do not qualify as expected benefit plans, must pay the PCORI Fee themselves.
The PCORI fee is calculated by multiplying a dollar amount set by the Internal Revenue Service (IRS) each year by the average number of people covered by the plan during the same period. The IRS recently announced that for plan years ending on or after October 1, 2023, and before October 1, 2024, the dollar amount will be $3.22. For policy and plan years ending on or after October 1, 2024, and before October 1, 2025, the amount will be $3.47.
PCORI fees for the prior plan year are due on or before July 31st (e.g., PCORI fees for plan years ending in 2024 are due July 31, 2025). Plan sponsors and carriers pay the fee by filing the second quarter version of IRS Form 720 and remitting payment to the U.S. Treasury. Form 720 is a quarterly excise tax form that businesses use for their PCORI fee submission even if they do not file and pay excise taxes with Form 720 during any other quarter of the year. The second quarter version of Form 720 is typically not released until May or June, so businesses that offer self-funded coverage cannot pay the fee too far in advance. However, knowing the fee rates for the year ahead is helpful in estimating upcoming tax expenditures.
Please contact your ExpressLink representative with any questions.