The Affordable Care Act (ACA) created a research institute known as the Patient-Centered Outcomes Research Institute (PCORI). The goal of PCORI is to help patients and those who care for them make betterinformed decisions about healthcare choices. PCORI is funded by fees which are charged to health plans.The following information is designed to help employers understand their payment obligations.
Fully-insured health plans – The insurance company is responsible for paying the PCORI fee. However, most employers with fully-insured health plans are indirectly paying these fees by virtue of higher premium payments.
Self-insured health plans – The employer is responsible for paying the PCORI fee. The fee is determined based on the average number of covered lives in the previous plan year. An easy way to calculate the average number of covered lives is using a snapshot method. Under this method, an employer picks one day during each quarter of the plan year (e.g. Jan 1, Apr 1, Jul 1, Oct 1), adds the total number of covered lives (including dependents) for those days, and divides that number by 4.
Fee Amount – The upcoming fee depends on when the plan year ended.
Plan Year Ending Date – This is the last day of the plan year. As an example, a plan that had an effective date of January 1st would have a plan year ending date of December 31st.
Making Payments – Employers should complete Form 720 for the second quarter to make payments.
Due Date – The fees are due by July 31, 2018 for plan years which ended in 2017.
Special Rules for HRAs – Employers with a fully-insured health plan and an integrated Health Reimbursement Arrangement (HRA) must pay the PCORI fee for the HRA, but they may treat each HRA participant as a single covered life. In other words, the fee generally does not apply to spouses or dependents covered under the HRA. Employers with a self-insured health plan and an integrated HRA may treat the coverage as a single plan assuming they have the same plan year.
FSAs – Flexible Spending Accounts (FSAs) are not subject to PCORI fees if they are excepted benefits.
HSAs – Health Savings Accounts (HSAs) are not subject to PCORI fees.
Dental and Vision – Stand-alone dental and vision plans are not subject to PCORI fees.