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PCORI Important Information

The Affordable Care Act (ACA) requires insurance issuers and sponsors of self-insured health plans to pay Patient-Centered Outcomes Research Institute Fees (PCORI).

The PCORI fees apply for plan years ending on or after October 1, 2012, but do not apply for plan years ending on or after October 1, 2019.  For calendar year plans, the fees are effective through 2018 plan years.

PCORI fees are reported and paid annually using IRS From 720 (Quarterly Federal Excise Tax Return).  The applicable PCORI fee you pay this year, by July 31, 2018, is based on your plan year end date in 2017.

  •  $2.26 for plan years ending between January 1, 2017 - September 30, 2017
  •  $2.39 for plan years ending October 1, 2017 - December 31, 2017

Plans sponsored by all types of employers, including tax-exempt organizations and government entities, are subject to the PCORI fees.  Most health plans, including major medical plans, presription drug plans and retiree-only plans are also subject to the fees, regardless of the number of participants.

Plans exempt from the fee include:

  • Excepted benefit plans, as defined under HIPAA - including stand-alone dental and vision plans, accident-only coverage, disability income coverage, liability insurance, worker's compensation coverage, credit-only insurance or coverage for on-site medical clinics.
  • A health FSA qualifies as an excepted benefit if:

Other group health plan coverage, not limited to excepted benefits, is made available  to the eligible class of participants; and

The maximum benefit payable under the FSA to any eligible participant does not exceed two times the participant's salary reduction election (or, if greater, $500 plus the amount of the salary reduction election).

  • Employee assistance programs, disease management programs, or wellness programs - if the program does not provide significant medical care or treatment.
  • Health Savings Accounts (HSAs)

The fees are based on the average number of covered lives under the plan or policy.  This generally includes employees and their enrolled spouses and dependents.  Individuals who are receiving continuation coverage (such as COBRA coverage) must be included in the number of covered lives under the plan in calculating  the fee. 

Special Counting Rule for HRAs and FSAs

HRAs and health FSAs are not completely excluded from the obligation to pay PCORI fees.  However, two special rules apply for plan sponsors that provide an HRA or health FSA.  Under these special rules:

  1. If a plan sponsor maintains only an HRA or health FSA (and no other applicable self-insured health plan), the plan sponsor may treat each participant's account as covering a single life.  This means that the plan sponsor is not required to count spouses or other dependents.
  2. An HRA is not subject to a seperate PCORI fee if it is integrated with another self-insured plan providing major medical coverage, provided the HRA and the plan are established and maintained by the same plan sponsor and have the same plan year. This rule allows the sponsor to pay the PCORI fee only once with respect to each life covered under the HRA and other plan.  However, if an HRA is integrated with an insured group health plan, the plan sponsor of the HRA and the issuer of the insured plan will both  be subject to the PCOIR fees, even though the HRA and insured group health plan are maintained by the same plan sponsor. 

The same analysis applies to health FSAs that do not qualify as excepted benefits.

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