IRS has released Notice 2023-70, which provides the “applicable dollar amount” for the Patient-Centered Outcomes Research Institute (“ PCORI” ) fee for plan years ending before October 1, 2024.
Background. PCORI was established under the Affordable Care Act to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, diagnose, manage or prevent illness or injury. The PCORI fee requires insurers and employers with self-funded group health plans to pay an annual fee to fund PCORI research. The PCORI fee requirement is currently scheduled to expire after 2029 or 2030, depending on the contract or plan year.
Calculating the PCORI Fee. The total PCORI fee is equal to the average number of lives covered during the policy or plan year, multiplied by the applicable dollar amount for that year. Notice 2023-70 announces that, for policy years and plan years that end on or after October 1, 2023, and before October 1, 2024, the applicable dollar amount is $3.22 (up from $3.00 for the previous 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 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).
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 no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies.
IRS Notice 2023-70 is available at: https://www.irs.gov/pub/irs-drop/n-23-70.pdf