IRS Increases PCORI Fee for the Year Ahead

IRS Increases PCORI Fee for the Year Ahead

The Internal Revenue Service announced that the Patient Centered Outcomes Research Institute (PCORI) fee will rise to $2.45 per covered life in plan years that fall between October 1, 2018, and September 30, 2019.  This six-cent increase will impact 2019 plan year rates and is attributable to a rise in national health expenditures.

The Affordable Care Act (ACA) requires that all health insurers and all companies that offer self-funded group health coverage pay the PCORI fee annually to fund a government-sponsored center to research the effectiveness of various medical care treatments.  Health insurance carriers are responsible for paying the tax on behalf of all fully-insured health plan participants, so if your company offers fully-insured coverage, then the new increase will be built into your 2019 rates.  However, all employers operating self-insured medical plans, including health flexible spending accounts that do not qualify as an excepted benefit plans, level-funded plans, and health reimbursement arrangements, have to pay the PCORI fee directly.

The total number of people covered by each group plan, not just the number of covered employees, determines the amount of the tax, and there are several methods an affected employer plan can use to make that count.  Applicable employer plan sponsors must document their calculation and pay their fee using IRS Form 720 by July 31 of each reporting year.  Form 720 is the IRS’s general quarterly excise tax filing form, so if an affected business doesn’t need to pay other excise taxes, it will only file Form 720 in the second quarter for PCORI fee purposes only.

If you have any questions about whether or not your company needs to calculate and pay its PCORI fee separately, or how you should do so, please contact your Kistler Tiffany Benefits’ Employee Benefits Consultant.