The Patient-Centered Outcomes Research Institute (PCORI) fee initially applied from 2012 to 2019. However, in December 2019, the Further Consolidated Appropriations Act, 2020 extended the fee to 2029.
The PCORI fee applies to all plans that provide medical coverage to employees. Medical coverage includes preferred provider (PPO) plans, health maintenance organization (HMO) plans, point-of-service (POS) plans, high deductible health plans (HDHPs), and health reimbursement arrangements (HRAs).
Download the full ACA Advisor for answers to frequently asked questions about the PCORI fee.
Below is an updated list of questions and answers pertaining to the PCORI fee.
Q1: What plans does the PCORI fee apply to?
A1: All plans that provide medical coverage to employees owe this fee. Medical coverage includes preferred provider (PPO) plans, health maintenance organization (HMO) plans, point-of-service (POS) plans, high deductible health plans (HDHPs), and health reimbursement arrangements (HRAs).
The fee does not apply to:
- Stand-alone dental and vision plans (stand-alone means these benefits are elected separately from medical, or the benefits are provided under separate insurance policies from the medical coverage)
- Life insurance
- Short- and long-term disability and accident insurance
- Long-term care
- Health flexible spending accounts (FSAs), as long as the employee also is offered medical coverage and any employer contribution is (in most cases) $500 or less
- Health savings accounts (HSAs)
- Hospital indemnity or specified illness coverage
- Employee assistance programs (EAPs) and wellness programs that do not provide significant medical care or treatment
- Stop-loss coverage
Q2: Does the fee apply to all medical plans?
A2: Yes, it does. There are no exceptions for small employers. There are no exceptions for government, church or not-for-profit plans. Grandfathered plans owe this fee. Union plans must pay the fee on their covered members.
Q3: Who must pay this fee?
A3: The fee must be determined and paid by:
- The insurer for fully insured plans (although the fee likely will be passed on to the plan)
- The plan sponsor of self-funded plans, including HRAs
- The plan’s TPA may assist with the calculation, but the plan sponsor must file IRS Form 720 and pay the applicable fee
- If multiple employers participate in the plan, each must file separately unless the plan document designates one as the plan sponsor
Q4: When is the PCORI fee due?
A4: The fee is due by July 31 of the year following the calendar year in which the plan/policy year ends (August 2, 2021 since July 1 is a Saturday).
Note: plan/policy years Nov 1, 2019 – Oct 31, 2020, Dec 1, 2019 – Nov 30, 2020 and Jan 1, 2020 – Dec 31, 2021 are also due July 31, 2021, but the applicable annual fee is $2.66 times the average number of covered lives under the plan or policy.
Q5: How much is the fee?
A5: The fee is $1.00 per covered life in the first year the fee is in effect. The fee is $2.00 per covered life in the second year. In the third through seventh years, the fee is $2.00, adjusted for medical inflation, per covered life. For plan years that end on or after October 1, 2014, and before October 1, 2015, the indexed fee is $2.08. For plan years that end on or after October 1, 2015, and before October 1, 2016, the indexed fee is $2.17. For plan years that end on or after October 1, 2016, and before October 1, 2017, the indexed fee is $2.26. For plan years that end on or after October 1, 2018, and before October 1, 2019, the indexed fee is $2.45. For plan years ending after October 1, 2019 and before October 1, 2020, the annual fee is $2.54 times the average number of covered lives under the plan or policy.
The fee is based on covered lives (i.e., employees, retirees, and COBRA participants and covered spouses and children). If, however, the plan owes the fee for HRA or health FSA coverage, it only needs to count the employees/retirees/COBRA participants – covered dependents are not counted for HRAs or health FSAs. Employees and their dependents who are residing outside U.S. (based on the address on file with the employer) may be excluded.
For more information, see:
- An IRS FAQ: Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers
- An IRS chart that shows which plans owe the fee: Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements
- IRS Form 720
- IRS Form 720 Instructions (see pages 8 – 9)
- PCORI regulation: Fees for the Patient-Centered Outcomes Research Trust Fund
- An IRS Information Page: Patient-Centered Outcomes Research Institute Fee
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This information is general and is provided for educational purposes only. It reflects UBA's understanding of the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.