Update on PCORI Fee Announced

June 19, 2020

Insured and self-insured health plans are required to pay a fee to the Patient-Centered Outcomes Research Trust Fund, commonly known as a PCORI fee. Enacted as part of the Affordable Care Act, the tax originally expired at the end of 2019. In 2020, however, the expiration date was extended to policy and plan years ending after September 30, 2029.

For policy and plan years ending on or after October 1, 2019, and before October 1, 2020, the fee will be $2.54 per covered life. The fee is paid by filing Form 720, due on July 31 for calendar policy and plan years. The fee is imposed on insurance companies for insured plans and plan sponsors for self-insured plans.

Because some employers, not anticipating an extension of the fee, may not have been tracking covered lives, Notice 2020-44 allows issuers and employers to use any reasonable method for calculating the average number of covered lives. This is in addition to the actual count method, the snapshot method, the member method and the state form method for insured plans and the actual count method, the snapshot method and the Form 5500 method for self-insured plans, all of which are detailed in regulatory guidance. If a reasonable method is used rather than one of the regulatory methods, it must be used consistently by all plans and policies for the duration of the year and must be used for all policies reported by the issuer on Form 720.

If you have questions regarding this filing obligation or need help with the filing, Cherry Bekaert would be glad to assist.