If your business operates a self-insured health plan, you may have heard about the need to file for the PCORI fee. But what exactly is the PCORI fee, and what are the filing requirements? In this blog, we break down the basics and answer common questions about the PCORI filing requirements for self-insured plans.
Q&A Section
1. What is the PCORI fee?
The PCORI fee is a charge imposed on health insurance issuers and employers that offer self-insured health plans. It helps fund the Patient-Centered Outcomes Research Institute (PCORI), which conducts research aimed at improving healthcare quality and outcomes.
2. Who is required to pay the PCORI fee?
Employers who sponsor self-insured health plans, including Health Reimbursement Arrangements (HRAs) and certain Flexible Spending Accounts (FSAs), are required to pay the PCORI fee. Fully insured plans will have the fee paid by the insurer, but self-insured plans place the responsibility on the employer.
3. How is the PCORI fee calculated?
The fee is calculated based on the average number of lives covered under the plan. For self-insured employers, the IRS provides several methods to calculate the average number of covered lives, including:
- The Actual Count Method
- The Snapshot Method
- The Form 5500 Method
The amount due per covered life is set by the IRS and is subject to annual adjustments.
4. When is the PCORI fee due?
The PCORI fee is due annually by July 31st of the year following the end of the plan year. For example, if your plan year ends on December 31st, 2023, your PCORI filing and fee payment will be due on July 31st, 2024.
5. How do I file and pay the PCORI fee?
Employers must file Form 720 with the IRS to report and pay the PCORI fee. This form must be submitted by the July 31st deadline each year, and payments can be made electronically or by mailing a check with the form.
6. Are there any penalties for failing to pay the PCORI fee?
Yes, failing to pay the PCORI fee or missing the filing deadline can result in penalties and interest charges. It’s crucial to stay on top of this obligation to avoid extra costs to your business.
7. Can the PCORI fee be waived?
In most cases, the PCORI fee cannot be waived, and employers are expected to meet their payment obligations. However, if you believe there are extenuating circumstances, it’s advisable to contact a tax professional or the IRS to explore your options.
Conclusion
Staying compliant with PCORI filing requirements is an essential responsibility for any business with a self-insured health plan. Understanding the fee structure and filing deadlines can save you from penalties and ensure your business meets its obligations.
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