The Affordable Care Act created the Patient-Centered Outcomes Research Institute (PCORI) to improve the quality of health care and provide information to help consumers make informed health care decisions. Most health plans must pay an annual fee to fund PCORI research. An exception is made for stand-alone dental or vision plans, EAPs, wellness programs, plans for employees outside of the U.S., HSAs, and almost all HRAs and FSAs. Click here for a chart explaining the types of plans that must pay the PCORI fee. The next PCORI fee is due July 31, 2018.
If a health plan is fully insured, the insurer is responsible for paying the PCORI fee. If the health plan is self-funded, the plan sponsor (employer) must pay the fee.
A self-funded health plan determines the applicable fee by multiplying the fee amount by the average number of total lives covered by the plan.
The rules allow employers with self-funded plans to select among three methods for determining the number of covered lives.
- Actual Count Method. Calculate the sum of the lives covered for each day of the plan year and divide that sum by the number of days in the plan year.
- Snapshot Method. Add the totals of lives covered on a date during the first, second, or third month in each quarter, or an equal number of dates for each quarter, and divide the total by the number of dates on which a count was made.
- Form 5500 Method. Include the number of lives actually reported on Form 5500 for the plan year (may be used only if Form 5500 is filed before PCORI Fee filed).
Insurers may select among four methods for determining the number of covered lives.
- Actual Count Method. Calculate the sum of lives covered for each day of the policy year and divide the sum by the number of days in the policy year.
- Snapshot Method. Add the total number of covered lives on a date during the first, second or third month in each quarter of the policy year, or an equal number of dates for each quarter, and divide the total by the number of dates on which a count was made.
- Member Months Method. Use the member months reported on the National Association of Insurance Commissioners Supplemental Health Care Exhibit, divided by 12.
- State Form Method. For an insurer not required to file the NAIC Exhibit, use data in any form that is filed with the state of domicile if the state form reports the number of lives covered.
The fee is paid for a completed plan year. The amount due for Plan Years ending on or after 10/1/2016 and before 10/1/2017 is $2.26 per covered life. The amount due for Plan Years ending on or after 10/1/2017 and before 10/1/2018 is $2.39 per covered life.
A self funded plan pays the PCORI fee by filing IRS form 720.