
- On June 27, 2023
- PCORI
Updated Form 720 Issued | Fees Due 7/31/23
Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research Institute (PCORI or PCOR) fees to the IRS, based on the average number of plan participants in the reporting plan year. If the medical plan is insured, the insurance carrier pays the fee on behalf of the policyholder. If the medical plan is self-insured, including level-funded and HRAs, the employer/plan sponsor must file the Form 720 and pay the fees to the IRS directly. The IRS just updated Form 720 recently.
Note that HRAs (including retiree-only plans) that provide reimbursement for medical expenses, even if integrated with an insured group medical plan, are subject to PCORI fees. However, self-insured plans that are primarily for employees working/residing outside of the U.S. or those that only reimburse for excepted benefits do not pay PCORI fees. Excepted benefits include plans that reimburse for only dental/vision expenses and most health FSAs.
• If your clients’ medical plan year ended January 1–September 30, 2022, the fee is $2.79 per covered life.
• If your clients’ medical plan year ended October 1–December 31, 2022, the fee is $3.00 per covered life.
The total due is calculated by multiplying the applicable fee by the average number of covered lives using an available method. The most common method to count covered lives is the “snapshot method”, which averages the covered lives on a day each quarter of the plan year. For example, for calendar year plans, you could count covered lives on January 1, April 1, July 1, October 1, and divide by 4. You would then multiply that number by $3.00 to calculate the total amount due for a plan year that ended December 31.
Covered lives includes employees and dependents. However, if the client is paying the fees for an HRA, they only count employees. To help calculate by any available method, use this worksheet.
Access Form 720 and instructions (starting on page 8 for “Applicable self-insured health plans”) on the IRS website.
If you have any questions, please reach out to the ExpressLink team: InfoExpress@ExpressLinkGA.com