The Affordable Care Act imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). If the plan is self-insured, the employer/plan sponsor must file the Form 720 and pay the fee to the IRS directly. If the plan is fully insured, the insurance carrier pays the fee on behalf of the policyholder.
Your plan is responsible for filing Form 720 Quarterly Federal Excise Tax Return and paying the PCORI fee each year by July 31. Should you have any questions or need any assistance, please feel free to reach out to a member of your HNI Benefits team.
The PCORI fee began in 2013 and ends for plan years beginning on or after October 1, 2019. The fee is based on the average number of lives covered under the policy or plan and applies to self-insured plans and integrated Health Reimbursement Account (HRAs) or Flexible Spending Arrangements (FSAs) paired with a fully insured plan.
Current fees based on plan year:
- For plan years ending 1/1/17 – 9/30/17: You pay $2.26 (per covered life, all members)
- For plan years ending 10/1/17 – 12/31/17: You pay $2.39 (per covered life, all members)
- This fee is payable on the number of members (eg; “belly buttons” on the plan); not the number of employees who participate in the plan.
Three IRS approved accounting methods:
- Actual count method – takes the total number of covered employees (employees and their covered family members or only employees if HRA or FSA) on each day of the plan year and divides by the number of days in the plan year
- Snapshot method – takes the total number of covered employees (employees and their covered family members or only employees if HRA or FSA) on one date in each quarter (dates in each quarter must be within 3 days of the dates for corresponding quarters) or an equal number of dates in each quarter and divide by four (4) quarters or the number of dates within each quarter
- Form 5500 method - Use participant counts from the 5500 for that plan for that year
IRS PCORI Fee, IRS PCORI Fee Question and Answers, IRS Form 720 The PCORI fee information needs to be entered on Page 2, Part II, #133 of the form. The deadline for the filing is July 31. Instructions for Form 720
This reminder is being provided as an informational tool. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information and any attachments, HNI is not exercising discretionary authority over the plan and is not assuming a plan fiduciary role, nor is HNI providing legal advice.