IRS Notice 2017-61 provides that the latest Patient Centered Outcomes Research Institute (“PCORI”) fee amount for policy and plan years that end on or after October 1, 2017, and before October 1, 2018 is $2.39. This represents a 13 cent increase over the prior PCORI fee rate of $2.26.
Background. The Affordable Care Act (“ACA”) imposes a fee (the “PCORI fee”) on fully-insured and self-insured plans that provide accident or health benefits to individuals living in the U.S. While the insurer is responsible for paying the PCORI fee for fully-insured plans, employers and employee organizations that maintain self-insured plans are also subject to the fee with respect to those plans.
The PCORI fee supports the Patient Centered Outcome Research Trust Fund, which will conduct comparative effectiveness research. The PCORI fee was first assessed for plan years ending after September 30, 2012. The PCORI fee for the first plan year was $1 per covered life, and increased to $2 per covered life in the second year. For subsequent plan years, the PCORI fee is adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.
The PCORI fee will not be assessed for plan years ending after September 30, 2019. For calendar year plans, this means that the last year of the PCORI fee will be 2018.
Calculating the PCORI Fee Amount. The PCORI fee amount is equal to the average number of lives covered during the policy or plan year multiplied by the applicable dollar amount for the year.
Plan sponsors may use any of the following methods to calculate the average number of covered lives under the plan:
- The actual count method (plan sponsor adds the totals of lives covered for each day of the year, and divides the total by the number of days in the plan year).
- The snapshot method (plan sponsor adds the total lives covered on one date in each quarter of the plan year and divides by four).
- The Form 5500 method (plan sponsor uses a formula that includes the number of participants actually reported on the Form 5500 for the plan year).
Paying the Fee. Plan sponsors of self-funded plans must remit the PCORI fee to IRS annually along with an IRS Form 720. The payment and form must be remitted to IRS by July 31 for all plan years ending in the preceding calendar year.