- Posted by Scott Wham
- On May 15, 2019
For some employers, a key federal compliance deadline is coming up on July 31, 2019—the payment of the Patient-Centered Outcomes Research Institute (PCORI) fee. Businesses that offer self-funded health coverage to their employees must calculate and pay the PCORI fee annually, using Form 720.
The PCORI fee is a small assessment on private health plans that funds federal research on the effectiveness of various medical care treatments. If an employer sponsors fully insured group health insurance coverage, then the health insurance carrier takes care of paying the PCORI fee. However, all businesses that operate self-insured medical plans, including health reimbursement arrangements (HRAs) and health flexible spending accounts (FSAs) that do not qualify as an excepted benefit plans have to calculate and pay the PCORI fee directly.
The total number of people covered by the self-funded group plan, including all dependents, determines the amount of the tax. The IRS gives employers four different counting methods to choose from to calculate the number of people covered by the plan over the year. For plan years ending between October 1, 2018, through September 30, 2019, the PCORI fee is $2.45 per covered life. To pay the assessment, applicable employers must complete and file tax Form 720. It is a quarterly excise tax form, but the whole PCORI fee is just paid once by submitting Form 720 at the end of the second quarter of 2019.
As the PCORI deadline gets closer, KTB will discuss with clients whether or not the fee applies directly to their plan. We will also provide more details about the different ways employers can count covered individuals to determine their exact payment amount.
If you need assistance with your PCORI fee filing, please contact your KTB Employee Benefits’ Consultant or Account Executive.