PCORI Fees Deadline for Group Clients is August 2

PCORI Fees Due Date

Payment of the Patient-Centered Outcomes Research Institute (PCORI) fee is due on August 2, 2021!  While there’s still plenty of time left to meet the deadline, brokers should make sure all employer group clients who might need to pay their PCORI fees on their own are getting their documentation ready now.

The PCORI fee is a small federal assessment on private health plans that funds a government-sponsored center to research the effectiveness of various medical care treatments. Health insurance carriers are responsible for paying it on behalf of all fully-insured health plan participants. However, businesses that offer self-insured health coverage to their employees (including level-funded group plans, health reimbursement arrangements, and certain flexible spending accounts) must calculate and pay the PCORI fee annually themselves. The Internal Revenue Service (IRS) has a helpful chart available to assist in determining which types of employers need to pay the PCORI fee on their own or if a health insurance carrier needs to make the payment for them.

How to Calculate PCORI Fees

Generally, the PCORI fee is calculated by tabulating the number of all lives covered by the plan and multiplying that number by a base fee amount (note, however, that there are exceptions for certain self-insured plans that are integrated with fully-insured major medical coverage; e.g. an HRA integrated with a fully-insured major medical plan). The fee for groups with plan years that end between January 2020 and September 31, 2020,  is $2.54 per covered life.  For plan years ending between October 1, 2020, through December 31, 2020, the PCORI fee is $2.66 per covered life.  The IRS prepared a chart to track which amount various employer groups might need to use in making their total PCORI fee calculation. The IRS also has FAQs available to guide plan sponsors through the fee-determination process.

How to Pay PCORI Fees

To pay the assessment, employers must complete and file Form 720.  This year, the weekend extends the typical July 31 deadline by a few days so that the fee is due on August 2, 2021.  Employers may file the Form 720 excise tax return quarterly for other reasons, but to pay PCORI fees, they use the second quarter’s form only. 

How to Count Plan Participants

The total number of people covered by the group plan, including all dependents, determines the tax amount. There are several methods an employer plan can use to count all of their plan participants.

  1. Actual Count Method: The plan sponsor adds the totals of lives covered for each day of the plan year and dividing that total by the total number of days in the plan year.
  2. Snapshot Method: The plan sponsor compiles the total number of lives covered on one date during the first, second, or third month of each quarter.  The plan sponsor can also pick several dates per quarter, as long as they use an equal amount of days in each quarter. Then, the sponsor must divide that total by the number of dates used each quarter.
  3. Form 5500 Method: The plan sponsor uses the number of participants reported on their last Form 5500.

Now is an excellent time to figure out which count a group will use. It’s also a perfect time to get your group clients to document their 2021 PCORI fee calculations!

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