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The PCORI fee is an annual federal excise fee funding the Patient-Centered Outcomes Research Institute, paid on self-insured health plans and by insurers on fully insured policies, calculated on the average number of covered lives and reported on IRS Form 720. It is due July 31 following the plan year.
The Affordable Care Act created the fee, and later legislation extended it through plan years ending before October 1, 2029. For a fully insured medical plan, the insurance carrier pays the fee and builds it into premium, so the employer has no filing duty. For a self-insured plan, the plan sponsor is responsible for calculating, reporting, and paying it. Certain account-based plans are also treated as self-insured, most notably a health reimbursement arrangement that is not integrated with a self-insured medical plan; a health FSA is generally excepted when it qualifies as an excepted benefit.
The fee is a per-covered-life amount that the IRS indexes annually, multiplied by the average number of lives covered during the plan year, which includes dependents, not just employees. Sponsors may choose among prescribed counting methods, such as the actual count, snapshot, or Form 5500 method, and the available methods differ for self-insured plans and HRAs, where only the participating employee is generally counted.
Reporting is on IRS Form 720 filed by July 31 following the end of the plan year, using the second quarter return even though the plan year may end at any point. Two frequent misses: employers who sponsor a stand-alone HRA alongside fully insured medical often do not realize they owe a separate fee, and the July 31 deadline is easy to overlook because Form 720 is otherwise unfamiliar to most employers.
The insurance carrier. It calculates and remits the fee and builds the cost into premium, so the employer has no filing duty for that plan. The obligation shifts to the plan sponsor only when the coverage is self-insured or is treated as self-insured.
Often yes. An HRA that is not integrated with a self-insured medical plan is treated as self-insured coverage, so an employer offering a stand-alone HRA alongside fully insured medical generally owes a separate fee. A health FSA is usually excluded when it qualifies as an excepted benefit.
On the quarterly federal excise tax return filed by July 31 following the end of the plan year, using the second quarter return regardless of when the plan year actually ends. The deadline is easy to miss because that return is unfamiliar to most employers.