Keenan Blog

Final PCORI Fees for Plan Years Ending 2018

March 13, 2019

One of the aims of the Affordable Care Act (ACA) was to provide a resource to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions. To that end, the ACA created a private, nonprofit corporation known as the Patient-Centered Outcomes Research Institute (PCORI) to help achieve this goal by creating and managing a wide variety of effectiveness studies regarding the delivery of health care.

Money to pay for these studies has been collected through a PCORI fee. This fee – treated as an excise tax by the IRS – mandated payment by plans with terms ending after Sept. 30, 2012, and before Oct. 1, 2019. The final PCORI fee for plan years ending in 2018 is due July 31, 2019, and will be slightly higher than previous payments.

While health insurance companies are responsible for paying the PCORI fees related to fully insured plans (they can pass the costs along to employers via higher premiums), plan sponsors of self-insured plans are required to pay the fee directly. This fee is calculated per-person (per plan enrollee) covered by the self-insured plan. The first year of PCORI fees were $1.00 per person, and that was increased to $2.00 in the second year that fees were collected. Since then, the fees have been indexed based on the increase in national health expenditures.

For plan years ending January 1, 2018 through September 30, 2018, the fee per covered life is $2.39.For plan years ending October 1, 2018 through December 31, 2018, the fee is $2.45 per covered life.

Paying PCORI Fees

Third-party reporting and payment of the PCORI fee is not permitted for self-funded plans. Therefore, self-insured employers are responsible for submitting the fee and accompanying paperwork to the IRS. For this, health plan sponsors should use Form 720 for the second calendar quarter to report and pay the PCORI fee by July 31, 2019.

While a third-party cannot report and make the PCORI payment for an organization, it would be a best-practice for any organization to consult with their benefits consultant/broker as well as a tax attorney, to ensure compliance with the PCORI final payment.

About Amy Donovan
Amy is Keenan's Vice President of Legislative and Regulatory Affairs, authoring the firm's Briefings and position papers on legislation, regulation and litigation that have an impact on the firm and its clients.