“PCORI Fees”

What is PCORI Fees?

PCORI fees, or Patient-Centered Outcomes Research Institute fees, are mandated charges imposed on health insurance policies and self-insured health plans. These fees fund the Patient-Centered Outcomes Research Institute, supporting research that evaluates the effectiveness of medical treatments to enhance healthcare decision-making. The fees aim to improve patient outcomes and healthcare quality, ensuring evidence-based information is available to guide medical choices.

The Purpose of PCORI Fees

The purpose of PCORI (Patient-Centered Outcomes Research Institute) fees is to fund research aimed at improving healthcare outcomes and decision-making. Mandated by the Affordable Care Act, these fees contribute to initiatives that evaluate the effectiveness of medical treatments. By supporting comparative clinical research, PCORI fees aim to provide valuable insights, ensuring evidence-based information for both healthcare providers and patients.

PCORI Fees Apply to What Types of Insurance Coverage?

• Health Insurance Policies: PCORI fees apply to a range of health insurance policies that provide coverage for individuals. This includes policies offering accident and health coverage.
• Employer-Sponsored Health Plans: The fee is also applicable to certain employer-sponsored health plans. Employers offering health coverage to their employees need to be aware of the PCORI fee requirements.
• Self-Insured Health Plans: Employers who sponsor self-insured health plans are subject to PCORI fees. This includes situations where the employer assumes the financial risk for providing healthcare benefits to its employees.
• Coverage for Individuals in the U.S: The PCORI fee is specifically tied to policies that provide medical coverage to individuals within the United States. It is not applicable to policies that do not cover individuals in the U.S.
• Mandated by the Affordable Care Act: The requirement to pay PCORI fees is established by the Affordable Care Act (ACA), which aims to improve healthcare quality and decision-making through funding research conducted by the Patient-Centered Outcomes Research Institute.

How is the PCORI Fee Calculated?

Calculating the PCORI fee involves multiplying the average number of covered lives by the yearly adjusted dollar amount. For 2020, this amount is $2.45 for plans ending between January and September 2019. The IRS provides different methods for determining the average count, varying for self-insured health plans and specified health insurance policies. Staying updated with the current IRS rates and choosing the appropriate calculation method ensures accurate compliance with PCORI fee requirements.

FAQs

How are individual lives counted for the PCORI fee?

When calculating PCORI fees, consider anyone covered during the plan year—employees and their dependents. For HRAs and FSAs, a simplified approach allows counting one life for each employee.

When are PCORI Fees due?

PCORI Fees are typically due by July 31st of each year. However, the due date may vary, so it’s essential to check the IRS guidelines for the specific year in question.

How are PCORI Fees reported to the IRS?

Employers and plan sponsors must report and pay PCORI Fees using IRS Form 720, Quarterly Federal Excise Tax Return. The form is typically filed annually, and payment is made with the form.

Are PCORI Fees tax-deductible for businesses?

Yes, PCORI Fees are generally tax-deductible for businesses as an ordinary and necessary business expense. However, it’s recommended to consult with a tax professional or advisor for specific tax implications.
Also, See: Superworks glossary | Superworks