With the annual Patient-Centered Outcomes Research Institute (PCORI) fee deadline rapidly approaching on July 31, 2020, we have certainly received an influx of inquiries regarding the IRS’ plans for that since, for an albeit brief time, the PCORI fees were thought to have gone the way of the dinosaurs.
Originally due to sunset, PCORI fees were given a stay-of-execution by the Trump Administration with the signing of the 2020 Further Consolidated Appropriations Act, which extended PCORI for an additional 10 years. Insurers and Employers (with HRAs or any other self-funded plans) will continue to be responsible for PCORI fees until 2029 or 2030 depending upon the end date of their plan year.
From an applicability standpoint not much has changed—and, fully-insured health plans are reminded that they are still not responsible for paying PCORI. The IRS Chart found here illustrates the various health coverage types and arrangements subject to the PCORI fee.
For non-calendar year plans that ended between January 1 – September 30, 2019, PCORI fees will be due on July 31, 2020. The payment amount due according to current guidance is $2.45 per person based on the average number of covered lives under an applicable health plan. This includes not only employees but spouses, dependents, COBRA beneficiaries, and retirees as well. There are multiple IRS recommended methods that can be utilized to calculate an employer’s PCORI fees. The IRS has expounded upon the fee calculation methodologies, documentation needed (IRS Form 720), and process for remittance of payment in more detail here.
The IRS has yet to announce an updated PCORI fee amount for plan years ending between October 1 – December 31, 2019 nor has it updated its webpages to address this matter but that amount is expected to be slightly higher than $2.45 per covered member, as the rate has historically ticked up a bit annually. As such, it is currently unclear how those plans will be affected. Please continue to refer to the IRS’ PCORI Filing Due Dates and Applicable Rates chart for additional information in the interim. We will of course continue to monitor the situation and keep everyone abreast as new details emerge but it is surely possible that an extension will be granted for these plans due to the unusual delay in announcing the updated fee amounts compounded with issues pertaining to the COVID-19 pandemic.
UPDATE JUNE 8, 2020:
The IRS, on June 8, 2020, announced the revised PCORI fee amount for plan years ending between October 1, 2019 and before October 1, 2020 via Notice 2020-44. For affected plans within this timeframe, the new amount will now be $2.54, a 9 cent increase over the previous fee. The IRS’ PCORI Filing Due Dates and Applicable Rates Chart has not been updated to correspond with the new guidance as of this posting but we anticipate that occurring soon.
Due to the anticipated termination of the PCORI fee, as discussed above, some transition relief has been offered. Issuers of specified health insurance policies ending on or after October 1, 2019 and prior to October 1, 2020 may utilize the same IRS recommended PCORI calculation methods (actual count, snapshot, member months, and state form) to determine the applicable fees. Likewise, the actual count, snapshot, and Form 5500 methods can still be used to determine the average number of covered lives. Once selected, the chosen method must be applied consistently for the duration of the plan year.