Employers that sponsor self-funded medical plans must report and pay their PCORI fee by July 31, 2020.
The fee is used to fund the Patient Centered Outcomes Research Institute (PCORI). Originally, the fee was to last only 6 years, with calendar-year plans making their final payment in 2019. However, in the spending bill passed by Congress in late December 2019, the PCORI fee was extended until 2029.
PCORI Fee Calculation
The amount of the PCORI fee for the relevant plan year is equal to the average number of covered lives during that plan year, multiplied by a specific dollar amount that is indexed.
- What is the relevant plan year? The plan year that ended during 2019.
- How do employers determine the average number of covered lives? Traditionally, employers have been allowed to use the actual count method, the snapshot method, or the Form 5500 method. For the PCORI fee due on July 31, 2020, employers may use any of those methods, or they may use any other reasonable method to determine the average number of covered lives.
- What is the specific dollar amount? For calendar-year plans, the specific dollar amount is $2.54. For fiscal-year plans whose plan year ended on or between January 1, 2019, and September 30, 2019, the specific dollar amount is $2.45. For fiscal-year plans whose plan year ended on or between October 1, 2019, and December 31, 2019, the specific dollar amount is $2.54.
Deadline
Employers must report and pay the PCORI fee by filing Form 720 and remitting payment on or before July 31, 2020
Additional Information
If you have any questions regarding this Client Alert, or if you would like assistance with any of the requirements described here, please contact a member of Venable's Employee Benefits and Executive Compensation practice group.