The Patient-Centered Outcomes Research Institute (PCORI) fee has been reinstated for issuers of specified health insurance policies and sponsors of applicable self-insured plans.
What is the Patient-Centered Outcomes Research Institute Fee?
The PCORI fee is a fee designed and designated to help fund the Patient-Centered Outcomes Research Trust Fund. The PCORI fee is reported on the second quarter Form 720 Quarterly Federal Excise Tax Return and is due no later than July 31 of the calendar year following the policy or plan year-end.
The PCORI fee was originally set to expire for plan years ending after September 30, 2019. However, in December 2019, with the passage of the Further Consolidated Appropriation Act, the PCORI fee was reinstated for an additional 10 years for applicable plans ending on or after October 1, 2019, through September 30, 2029.
It’s important to understand the compliance requirements when it comes to health plans.
What changes were made to the Patient-Centered Outcomes Research Institute Fee?
On June 8, 2020, the IRS released Notice 2020-44 increasing the fee for plans ending October 1, 2019, through September 30, 2020, to $2.54 for the average covered lives under the plan. This is up from the prior fee of $2.45.
In addition to the prior allowed counting methods used to determine the average lives covered, IRS Notice 2020-44 now allows issuers and plan sponsors to use any reasonable method to count the average number of lives for plan years ending October 1, 2019, through September 30, 2020, if that method is used consistently throughout the plan year for all policies reported on the Form 720. The PCORI fee will change each year; therefore, it’s important to make sure that the proper Form 720 is being used and calculations that are made utilize the appropriate fee rate.
Deposits are not required for the PCORI fee, and according to the instructions, issuers and sponsors are not required to pay the fee using the Electronic Federal Tax Payment System (EFTPS). However, if the EFTPS is used, make sure to note the payment is for the second period.
Unfortunately, there are no extensions of time available for filing and payment of the PCORI fees.
Understanding the Importance of Patient-Centered Outcomes Research Institute Fee Filing
The PCORI fee is a crucial compliance component for issuers of specified health insurance policies and sponsors of applicable self-insured plans. Understanding the changes and the associated filing fees is important for organizations required to pay PCORI fees.
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