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As part of the Affordable Care Act's broader framework to enhance healthcare decisions through research, the Patient-Centered Outcomes Research Trust Fund fee (PCORI fee) was established to fund the Patient-Centered Outcomes Research Institute. This fee impacts issuers of certain health insurance policies and sponsors of self-insured health plans, making it an important consideration for HR professionals managing company benefits.
What is the PCORI Fee? The PCORI fee is levied on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans. The fee supports the PCORI, which conducts research to provide information about the best available evidence to help patients and their healthcare providers make more informed decisions.
Effective Period and Applicability The fee applies to policy and plan years ending after September 30, 2012, and before October 1, 2029. It includes a range of plan types and covers periods where such plans are active, ensuring a broad basis for funding the institute’s initiatives.
Calculation of the Fee Calculating the PCORI fee involves determining the average number of lives covered under the policy or plan during the applicable year and multiplying this by a specified dollar amount set annually. The amount is adjusted to reflect inflation in National Health Expenditures, ensuring that the fee's impact grows in line with broader economic factors affecting healthcare costs.
Fee Amounts and Reporting For example, for policy and plan years ending after September 30, 2023, and before October 1, 2024, the applicable dollar amount is $3.22 per covered individual. This scale adjusts down annually from previous years, reflecting adjustments for inflation and economic conditions.
Reporting the Fee Issuers and plan sponsors are required to report and pay the PCORI fee annually using IRS Form 720, which is due by July 31 of the year following the last day of the plan year. This form, commonly used for quarterly federal excise tax returns, is used for compliance with this provision.
Implications for Employers For employers, understanding the PCORI fee is vital for proper benefits administration and compliance. It's essential for HR professionals to track not only the coverage they provide but also the specifics of the fee calculation and payment procedures. Ensuring accurate calculations and timely payments can prevent potential compliance issues and penalties.
Exemptions and Special Considerations Certain plans, like those that only provide excepted benefits (such as limited vision or dental benefits), are exempt from the PCORI fee. Additionally, specific government programs and plans covering employees residing outside the United States are also excluded, providing some relief for specialized insurance policies and employer circumstances.
Conclusion The PCORI fee represents a small but significant part of the ACA's impact on health plans. For HR professionals, staying informed about annual adjustments to the fee, understanding the calculation methods, and ensuring accurate reporting are all pivotal elements in effective benefits administration and compliance. As healthcare continues to evolve, the role of informed decision-making becomes ever more critical, underscoring the importance of the PCORI's work and the associated employer responsibilities.
For more detailed guidance and updates on the PCORI fee and its application, HR professionals should regularly consult the IRS’s official publications and updates.
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