The Affordable Care Act established the Patient-Centered Outcomes Research Institute (PCORI) to support research evaluating the effectiveness of medical treatments and healthcare delivery. To help fund this work, certain employer-sponsored health plans must pay an annual PCORI fee.
Although the payment is not due until mid-summer, spring is a good time for employers to confirm whether the fee applies to their plans and determine who is responsible for filing.
Which Plans Are Subject to the PCORI Fee?
The fee generally applies to self-funded group health plans, including health reimbursement arrangements (HRAs). Employers sponsoring these plans are responsible for calculating and paying the fee directly to the IRS.
Some level-funded medical plans may also be treated as self-funded for this purpose, meaning the employer may be responsible for reporting and paying the fee depending on how the arrangement is structured.
Plans that provide only excepted benefits, such as stand-alone dental or vision coverage, are generally not subject to the PCORI fee.
For employers with fully insured health plans, the insurance carrier typically reports and pays the PCORI fee. However, employers may still have filing obligations if they sponsor other self-funded arrangements alongside their insured coverage.
When and How the Fee Is Paid
PCORI fees are reported and paid annually using IRS Form 720, the Quarterly Federal Excise Tax Return. For calendar-year plans, the filing deadline is July 31 of the following year.
The amount owed is based on the average number of covered lives under the plan during the plan year. The IRS allows several methods for determining this number, allowing employers to use the approach that best fits their plan administration and available data.
Why It’s Worth Reviewing Early
Although the PCORI filing deadline is still a few months away, employers benefit from reviewing their obligations in advance. Determining whether the fee applies, gathering enrollment data, and coordinating with vendors or finance teams can take time—particularly for employers with multiple benefit arrangements.
Employers should also confirm whether they sponsor any self-funded components, such as HRAs, that may trigger the fee even when the primary medical coverage is fully insured.
Final Reminder
PCORI fees are a routine but often overlooked compliance obligation. Taking a few minutes this spring to confirm whether the fee applies can help employers avoid last-minute questions or filing delays as the July deadline approaches.
If you have questions about whether your health plan is subject to the PCORI fee or how to calculate the amount owed, your INSURICA team is available to assist.
This article is for informational purposes only and does not constitute legal or tax advice. Employers should consult legal counsel or a qualified advisor regarding compliance obligations.