Tag Archives: PCORI

PCORI Fee Deadline Approaches

June 20, 2018

0 Comments

The annual Patient Centered Outcomes Research Institute (PCORI) fee is due by July 31, 2018. The fee was created by the Affordable Care Act to help fund the nonprofit Patient-Centered Outcomes Research Institute which supports clinical effectiveness research. Typically only employers with self-funded health plans, including health reimbursement arrangements (HRAs), must calculate and pay the fee. Health insurance companies will pay the fee on behalf of employers with fully-insured health plans.

Plan sponsors will use IRS Form 720 (Quarterly Federal Excise Tax Return) to report the fee. The fee amount changes annually and is tied to the plan year. The amount due each year is calculated by multiplying the applicable fee by the average number of covered lives in the plan. Employers have several methods available to calculate the average number of covered lives including the actual count method, snapshot method and Form 5500 method. For plan years ending in January 2017 through September 2017, the fee will be $2.26. For plans ending in October 2017 through December 2017, the fee will be $2.39.

For more information on how to calculate and pay the PCORI fee, please contact your service team.

Continue reading...

Last Call for PCORI Fees

July 26, 2017

0 Comments

Self-funded medical plan sponsors must calculate and pay PCORI fees by July 31. Click here for details on which plans are subject to PCORI fees, how to calculate them and which IRS forms to use.

Continue reading...

PCORI Fees Due By July 31, 2017

June 6, 2017

0 Comments

As a reminder, the annual fee for the Patient Centered Outcomes Research Institute (PCORI) is due no later than July 31, 2017.  Self-funded medical plan sponsors are responsible for reporting and paying the using the Quarterly Federal Excise Tax Return from the IRS (Form 720, Part II line 133 (c) or (d) for the applicable plan year).  Detailed instructions on completion of Form 720 are available here.  (Fees for fully insured plans will be paid by the insurance carrier.)

In addition to major medical plans, HRAs and FSAs that do not qualify as excepted benefits are also subject to the fee. An HRA/FSA integrated with other medical coverage may only be treated as a single plan if both have the same plan year and plan sponsor.  An insured major medical plan and self-funded HRA (e.g., deductible reimbursement plan) would be considered separate plans, which would each be responsible for payment of the fee.  No payment will be due for the following types of plans:

  • Stand-alone dental and vision coverage
  • Life insurance
  • Disability and accident insurance
  • Health FSAs with only employee contributions (or employer contributions up to $500 annually)
  • Health savings accounts (HSAs)
  • Hospital indemnity or specified illness coverage
  • Employee assistance and wellness programs that do not provide significant medical care or treatment
  • Stop-loss coverage

The amount of the fee changes annually and is tied to plan year. For this year, the fee will be $2.17 per covered life for plan years beginning February 1-October 1 and $2.26 for November, December and January 1 plan years.  That fee amount should be multiplied by the average number of individuals covered under the Plan during the applicable plan year (e.g., employee/spouse coverage would be considered 2 covered lives), although HRA/FSA plans can assume one covered life for each enrolled employee (or subscriber).  Retirees and COBRA participants should also be included in the covered lives calculation.

The average number of covered lives on which the fee is based may be determined using one of the following methods:

  • Actual count method–enrollment numbers on each day of the plan year are totaled and divided by total number of days in that plan year;
  • Snapshot method—Enrollment counts are taken from one consistent date each quarter (within 3 days) and divided by the number of dates on which a count was made;
  • Snapshot factor method—Participant counts are taken from one consistent date each quarter (within 3 days) and separated into 2 categories–self-only coverage and other than single-only coverage. The number of participants with other than single-only coverage is multiplied by 2.35 and then that product is added to number of participants with single-only coverage. That total is then divided by the number of dates on which a count was made; or
  • Form 5500 method (for plans that have actually filed the Form 5500 by July 31, 2017)—sum of reported participants covered at beginning and end of plan year; or if plan has self-only coverage, that sum divided by 2.Any erroneous payments should be reported using Form 720-X. The IRS has stated that plan sponsors may not reduce the amount reported and paid based on an overpayment from a prior year.
  • Plan sponsors must choose one method to use for each entire plan year, however they are permitted to change methods from year to year.
Continue reading...

PCORI Fees Are Due July 31, 2016

June 29, 2016

0 Comments

The annual fee for the Patient Centered Outcomes Research Institute (PCORI) is due July 31, 2016.  If you need a quick refresher on PCORI, we have previously written about the PCORI fee and who is required to pay it. Generally speaking, self-funded medical plan sponsors are responsible for reporting and paying the PCORI fee using Form 720, Part II line 133 (c) or (d)).  Detailed instructions on completing Form 720 are available here.  (Fees for fully insured plans will be paid by the insurance carrier.)

The amount of the fee changes annually and is tied to plan year. For this year, the fee will be $2.08 per covered life for plan years beginning February 1-October 1 and $2.17 for November, December and January 1 plan years.  Please see our prior article on how to calculate the number of covered lives if you have questions.

Continue reading...

PCORI Fees Due By July 31, 2015

June 23, 2015

0 Comments

Established by the Affordable Care Act to be used as funding for the Patient Centered Outcomes Research Institute (PCORI), the seven-year fee is intended to be used to evaluate the clinical effectiveness of different treatment options and is sometimes called the Comparative Effectiveness Research Fee.

The fee applies to both fully insured and self-funded group health plans, regardless of grandfathered status.  There is no exemption for plans maintained by government, not-for-profit or church employers.

In addition to major medical plans, HRAs and FSAs that do not qualify as excepted benefits are also subject to the fee.  An HRA/FSA integrated with other medical coverage may only be treated as a single plan if both have the same plan year and plan sponsor.  An insured major medical plan and self-funded HRA (e.g., deductible reimbursement plan) would be considered separate plans, which would each be responsible for payment of the fee.  No payment will be due for the following types of plans:

  • Stand-alone dental and vision coverage
  • Life insurance
  • Disability and accident insurance
  • Health FSAs with only employee contributions (or employer contributions up to $500 annually)
  • Health savings accounts (HSAs)
  • Hospital indemnity or specified illness coverage
  • Employee assistance and wellness programs that do not provide significant medical care or treatment
  • Stop-loss coverage

Insurance companies are responsible for payment of the fee for insured plans. The plan sponsor (generally the employer) is responsible for payment of the fee for a self-funded plan, including a self-funded HRA or deductible reimbursement plan offered in connection with an insured medical plan.  Those plan sponsors should report and pay the fee using the Quarterly Federal Excise Tax Return from the IRS (Form 720, Part II).  Detailed instructions on completion of Form 720 are available here.

The amount of the fee changes annually and is tied to plan year.  For this year, the fee will be $2 per covered life for plan years beginning February 1-October 1 and $2.08 for November, December and January 1 plan years.  That fee amount should be multiplied by the average number of individuals covered under the Plan during the applicable plan year (e.g., employee/spouse coverage would be considered 2 covered lives), although HRA/FSA plans can assume one covered life for each enrolled employee (or subscriber).  Retirees and COBRA participants should also be included in the covered lives calculation.

The average number of covered lives on which the fee is based may be determined using one of the following methods:

  • Actual count method–enrollment numbers on each day of the plan year are totaled and divided by total number of days in that plan year;
  • Snapshot method—Enrollment counts are taken from one consistent date each quarter (within 3 days) and divided by the number of dates on which a count was made; or
  • Form 5500 method (for plans that have actually filed the Form 5500 by July 31, 2015)—sum of reported participants covered at beginning and end of plan year; or if plan has self-only coverage, that sum divided by 2.Any erroneous payments should be reported using Form 720-X. The IRS has stated that plan sponsors may not reduce the amount reported and paid based on an overpayment from a prior year.
  • Plan sponsors must choose one method to use for each entire plan year, however they are permitted to change methods from year to year.
Continue reading...

PCORI Fee Due July 31st – Final Reminder

July 8, 2014

0 Comments

One final reminder that PCORI fee payments are due no later than July 31, 2014. This fee was implemented as part of the Affordable Care Act and will be used to fund the Patient-Centered Outcomes Research Institute (PCORI) to provide research and information to assist patients and health care providers.

Major medical, retiree plans, COBRA and HRAs are all generally required to pay the fee, but not HSAs, stop-loss coverage, specified illness benefits and EAPs that do not provide significant benefits in the nature of medical care or treatment.  Please note that a self-funded HRA (e.g., deductible reimbursement) plan is subject to a separate fee assessment even if it is provided under a fully insured medical plan.  A comprehensive chart of plans to which the fee applies can found here.

Fees & Reporting

The fee amount is calculated based upon the average number of covered lives under the plan during the policy or plan year:

  • Multiplied by $1 for the first year (February 1—October 1 plan or policy years)
  • Multiplied by $2 the second year (November 1—January 1 plan or policy years)

Fee amounts should be reported and paid using IRS Form 720 (Part II on page 2), the Quarterly Federal Excise Tax Return.  Detailed instructions for completing the form are available on the IRS website.

More information can be found here.

Continue reading...

PCORI Fee Reminder

June 10, 2014

0 Comments

Just a friendly reminder that PCORI fee payments are due no later than July 31, 2014. This fee was implemented as part of the Affordable Care Act and will be used to fund the Patient-Centered Outcomes Research Institute (PCORI) to provide research and information to assist patients and health care providers.

Although many plans were subject to the fee last year, 2014 marks the beginning of its applicability to nearly all employer-sponsored medical plans regardless of plan year.

The fee applies to policy and plan years ending after September 30, 2012 and before October 1, 2019. Just to confuse things, the applicability date for the fee is based on the date the plan or policy year ends (rather than the first day of the plan year that we use for almost everything else).  So, this will be first year plans with February 1 –October 1 plan years or renewal dates will need to pay the fee.  Plans with a November 1, December 1 or January 1 plan/policy year should have paid the fee last year and need to report and pay the second year fee this July.

What plans are subject to the fee?

Major medical, retiree plans, COBRA and HRAs are all generally required to pay the fee, but not HSAs, stop-loss coverage, specified illness benefits and EAPs that do not provide significant benefits in the nature of medical care or treatment.  Please note that a self-funded HRA (e.g., deductible reimbursement) plan is subject to a separate fee assessment even if it is provided under a fully insured medical plan.  A comprehensive chart of plans to which the fee applies can found here.

Who is required to pay the fee?

Health insurance issuers and plan sponsors (typically the employer) of self-insured plans described above.  The insurance carrier is responsible for reporting and payment of fees due for fully insured health insurance plans.  Self-insured plan sponsors will need to calculate the applicable amount due and pay the fee themselves.

How much is the fee?

The fee amount is calculated based upon the average number of covered lives under the plan during the policy or plan year:

  • Multiplied by $1 for the first year (February 1—October 1 plan or policy years)
  • Multiplied by $2 the second year (November 1—January 1 plan or policy years)

In later years the fee will be adjusted for inflation in health care spending (as determined by the Secretary of Health and Human Services).

How is the average number of lives covered under the plan calculated?

The number of covered lives includes all employees, former employees (such as COBRA beneficiaries and retirees), spouses and dependents covered under the plan.  All individuals covered under the plan must be counted even if they are also covered under another insurance policy or self-funded plan.

Self-insured HRA and applicable FSA plans are subject to a separate fee if they are provided in connection with a fully insured medical plan.  HRA and FSA plans may consider each participant as a single life and do not need to include spouses and dependents in calculating the number of covered lives.

For ease of administration, J.W. Terrill is recommending that employers use an average of the number of participants/covered lives from quarterly billing statements or eligibility reports, however a plan sponsor may also use one of the following methods to determine the average number of lives covered during the plan year:

  • Actual count (adding the totals of lives covered on each day of plan year and dividing by the number of days in the plan year)
  • Snapshot (adding totals of lives covered on at least one consistent date during each quarter of the plan year and dividing by the number of dates used)
  • 5500 Method (sum of total participants covered at the beginning and end of the plan year, as reported on Form 5500 filed for the plan or that sum divided by 2 for a plan that only offers self-only coverage)

Please note that the 5500 method may only be used if a Form 5500 for the plan year has actually been filed by the fee’s due date and may not apply if the plan receives an extension for 5500 filing.

How is the fee reported and paid?

Fee amounts should be reported and paid using IRS Form 720 (Part II on page 2), the Quarterly Federal Excise Tax Return.  Detailed instructions for completing the form are available on the IRS website.

If you have any questions or need help in calculating the PCORI fee amounts, please contact your Account Manager immediately.

Continue reading...

PCORI Fee Due Beginning July 31, 2013

July 8, 2013

0 Comments

Update July 25, 2013:

The time remaining to file Form 720 and pay the PCORI fee is now 4.5 days and closing fast!

Please note that the due date for payment of the fee is based on the date your plan or policy year ends. The fee must be paid by July 31 of next calendar year following the year in which the plan ended. Plans that ended from October 1, 2012 through December 31, 2012 will need to pay the fee by July 31, 2013. This includes plans with a November, December and January 1 plan year or renewal date. (Plans with February-October 1 plan years will need to start paying the fee by July 31, 2014.)

If your company sponsors an HRA (Health Reimbursement Arrangement; aka deductible reimbursement or supplemental medical plan) with a benefit of at least $500, you will be responsible for payment of the PCORI fee for that plan unless it is fully insured. Although there was previously some ambiguity surrounding fee liability for those plans, the final regulations have clarified that these plans are considered a separate self-insured arrangement and are subject to payment of the fee for each participant in addition to the fee paid by the insurer of a related medical plan.

Although the rules specify three methods for determining the average number of lives covered under a plan, plan sponsors responsible for payment of the fee by July 31, 2013 are entitled to use any reasonable method to make that determination. J.W. Terrill is recommending that employers use an average of the number of participants/covered lives from quarterly billing statements or eligibility reports.

If you have any questions or need help in calculating the PCORI fee amounts, please contact your Account Manager immediately.

The Patient Protection and Affordable Care Act of 2010 created the Patient-Centered Outcomes Research Institute (PCORI) to provide research and information to assist patients and health care providers. This organization will be funded in part by a PCORI fee assessed on health insurance plans.

When does the PCORI fee go into effect?

The fee applies to policy and plan years ending after September 30, 2012 and before October 1, 2019.

Who is required to pay the fee?

  • Health insurance issuers and plan sponsors (typically the employer) of self-insured plans including, but not limited to:
  • Health insurance plans, but NOT dental and vision plans
  • Retiree-only plans
  • FSA plans, if the employer contributes more than $500
  • HRA, even if provided under a fully insured plan (Note: HRA’s of $500 or less in general are considered a HIPAA excepted benefit and not subject to PCORI fees based on current guidance)

The fee due for fully insured health insurance plans will be reported and paid directly by the insurance carriers. Self-insured plan sponsors will need to calculate the applicable amount due and file IRS Form 720 along with the payment.

How much is the fee?

The fee amount is calculated based upon the average number of covered lives under the plan during the policy or plan year:

  • Multiplied by $1 for the first year (plan or policy year ending after Sept. 30, 2012, and before Oct. 1, 2013)
  • Multiplied by $2 the second year (plan or policy year ending after Sept. 30, 2013, and before Oct. 1, 2014)

In later years the fee will be adjusted for inflation in health care spending (as determined by the Secretary of Health and Human Services)

How is the average number of lives covered under the plan calculated?

The number of covered lives includes all employees, former employees (such as COBRA beneficiaries and retirees), spouses and dependents covered under the plan. All individuals covered under the plan must be counted even if they are also covered under another insurance policy or self-funded plan.

Self-insured HRA and applicable FSA plans are subject to a separate fee if they are provided in connection with a fully insured medical plan. HRA and FSA plans may consider each participant as a single life and do not need to include spouses and dependents in calculating the number of covered lives.

To determine the average number of lives covered during the plan year, a plan sponsor must use one of the following methods:

  • Actual count (adding the totals of lives covered on each day of plan year and dividing by the number of days in the plan year)
  • Snapshot (adding totals of lives covered on at least one consistent date during each quarter of the plan year and dividing by the number of dates used)
  • 5500 Method (sum of total participants covered at the beginning and end of the plan year, as reported on Form 5500 filed for the plan or that sum divided by 2 for a plan that only offers self-only coverage)
  • Please note that the 5500 method may only be used if a Form 5500 for the plan year has actually been filed by the fee’s due date and may not apply if the plan receives an extension for 5500 filing.

How is the fee amount reported and paid?

Fee amounts should be reported and paid using IRS Form 720 (Part II), the Quarterly Federal Excise Tax Return. Detailed instructions for completing the form are available on the IRS’ website.

When is the fee due?

Form 720 is due annually by July 31 for plan years ending during the preceding calendar year.

For calendar year plans (and other plans ending October 1, 2012—December 31, 2012), returns along with payment must be postmarked by July 31, 2013. For plans and polices with years ending January 1, 2013—September 30, 2013, the first fee deadline is July 31, 2014.

Continue reading...

IRS Guidance on Comparative Effectiveness Research Fee

May 23, 2012

0 Comments

Although most of the country seems to have put compliance with upcoming health care reform mandates on hold pending the announcement of the Supreme Court’s decision about the future of the Patient Protection and Affordable Care Act (PPACA), the federal government has been moving forward on the assumption that the law will be upheld. On April 12, the IRS issued proposed regulations regarding the payment of the “comparative effectiveness research fee” which will be assessed on health insurers and sponsors of self-insured group health plans to fund the Patient-Centered Outcomes Research Institute (PCORI). The purpose of the PCORI is to promote research to evaluate and compare the health outcomes and clinical effectiveness, risks and benefits of medical treatments, services, procedures and drugs.

The proposed regulations are not yet final, however they do offer some clarification of various outstanding issues associated with payment of the fee (although perhaps that depends on whether you use the government’s definition of “clarity”).

What Plans Are Subject to the Fee?
The fee will apply to both insured and self-funded medical plans with the following exceptions:

  • HIPAA-Excepted Benefit Plans, including limited-scope dental and vision plans, onsite medical clinics, accident-only or disability-only plans and most flexible spending accounts (FSAs) ;
  • Health Savings Accounts (HSAs);
  • Employee assistance (EAP), disease management, and wellness programs that do not provide significant benefits for medical care or treatment;
  • Expatriate plans primarily covering employees living and working outside the United States; and
  • Stop-loss coverage.

Who is Responsible for Payment of the Fee?
Fees should be paid by the insurance company for insured plans and by the “plan sponsor” for self-funded plans.

A plan sponsor with multiple self-funded plans that are operated on the same plan year will only be required to pay a single fee for all of those plans combined. A self-funded Health Reimbursement Account (HRA) offered in connection with an insured medical plan, will be subject to two separate fee assessments, paid by the plan sponsor and insurer respectively.

For a multi-employer plan with no designated “plan sponsor,” each employer contributing to the plan will be responsible for the payment of fees attributed to its own covered employees.

How Much is the Fee?
The amount of the fee is $1 per covered life for the first year and $2 for the second year. Beginning with the third year, the fee will be determined based on national health expenditures.

How is the Amount Due Calculated?
The amount due for each plan is based on the average number of lives (not employees or participants) covered under the plan during the plan year. Although for an HRA (or non-exempted FSA), the plan may use the number of participants rather than lives.

The proposed regulations offer different approaches for calculating the number of covered lives, which depend on whether the plan is insured or self-funded. Self-funded plans may use any “reasonable” method of calculating the average number of covered lives during the 2012 plan year, however the regulations list three alternative calculation methods (one of which must be used for future calculations):

  • Actual Count—the sum of the actual number of lives covered on each day of plan year divided by the number of days in the plan year;
  • Snapshot—the sum of the actual number of covered lives on one day of each quarter of the plan year divided by four; or
  • Form 5500—using the Form 5500 filed for the plan year; the sum of the number of participants covered at beginning of plan year and the number of participants covered at the end of the plan year. (If only single coverage is offered, the plan may divide that sum by two).

When Does the Fee Need to be Paid?
The effective date of the fee assessment is based on plan year’s end date rather than its start date. The fee officially applies to plan years ending on or after October 1, 2012, so the fee would be in effect for the 2012 plan year for a calendar year plan. To complicate things further, the payment due date is based on the calendar year in which the plan ends, so—

  • For plans ending 10/1/2012-12/31/12 (including calendar year plans)— initial payment is due by 7/31/2013;
  • For plans ending 1/1/2013-9/30/13—the initial payment is due by 7/31/2014.

How is the Fee Paid?
The fee should be paid and reported using IRS Form 720 (Federal Excise Taxes).

When Will It End?
Fortunately there is an end in sight; fees only have to be paid for plan years ending before October 1, 2019 (2018 for calendar year plans).


[1] A health FSA qualifies as an excepted benefit if: (a) the maximum benefit payable for the employee under a health FSA does exceed two times the employee’s salary reduction election, (b) the employee has other coverage available under a group health plan of the employer and (c) that other coverage is not limited to the other excepted benefits shown above.

Continue reading...

Comparative Effectiveness Research Fee

February 11, 2011

0 Comments

The Patient Protection and Affordable Care Act (PPACA) establishes a new Patient Centered Outcomes Research Institute (PCORI) responsible for the identification, prioritization and execution of comparative effectiveness research.  The PCORI is responsible for setting national clinical comparative effectiveness research priorities and is directed to enter into contracts to manage the funding and conduct of research, with preference given to AHRQ and NIH.

Employer Impact

Research will be funded by the newly established Patient Centered Outcomes Research Trust Fund (PCORTF), which shall receive appropriations from private insurance based taxes.  However, this funding source is time limited, and any amounts remaining in the PCORTF after September 30, 2019, will no longer be available for research and must be transferred back to the general treasury. This will be accomplished by imposing taxes on fully-insured and self-funded plans as follows:

  • 2013 – $1.00 per enrollee tax on fully-insured and self-funded group health plans to fund comparative effectiveness research.
  • 2014 – $2.00 per enrollee tax on fully-insured and self-funded group health plans to fund comparative effectiveness research.
  • 2015 – 2019 indexed thereafter;  This fee sunsets after 2019.

Cost Curve Implications

Comparative effectiveness research has the potential to identify savings in the system and improve patient outcomes, but the most effective treatments are not necessarily the least costly treatments.  This will necessitate a careful balancing act by researchers and administration officials.

Implications for Personalized Medicine

The PPACA specifies that research design should account for individual differences and sub-populations, but the ability to use and misuse data will remain. The possibility for incorrect application is certainly present despite legislative attempts to minimize the impact. Contingent on study outcomes and regulatory interpretation this could have numerous unintended implications for the delivery of personalized medicine.

This communication is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent counsel before making any decisions or taking any action concerning the matters in this communication.

Continue reading...