ACA Compliance: PCORI Fees Due July 31, 2020

In December 2019, the Senate voted and the House approved, reauthorizing annual payment of the Patient-Centered Outcomes Research Institute (PCORI) fees by health insurers and group health plans to fund the Patient-Centered outcomes Research Trust Fund (PCORTF) until 2029.


Plans subject to PCORI fees include plan sponsors of self-insured medical plans that provide health or accident benefits.

The plans subject to PCORI fees (sometimes referred as Comparative Effectiveness Research Fees, or CERF for short) include plan sponsors of self-insured medical plans that provide health or accident benefits primarily to individuals living in the United States. Plans subject to the fee include major medical (including retiree-only and COBRA), level-funded plans, Health Reimbursement Accounts (HRAs) that are not integrated with an underlying self-insured medical plan, as well as Minimum Essential Coverage (MEC) plans that provide more than excepted benefits. Note, an HRA is not required to pay the fee for individuals who are covered under both an HRA and a self-insured major medical group plan with the same plan year. Most FSA health plans and Employee Assistance Programs (EAP) are not subject to the fee provided they do not provide significant benefits in the nature of medical care or treatment. Reporting is only required once a year.

Per the Affordable Care Act (ACA), self-insured plans must pay the fee via Form 720 to the IRS based on the average number of plan participants. If your medical plan ended in 2019, then Form 720 is due by July 31, 2020. (The fee is due July 31 of the calendar year immediately following the last day of the plan year in which the application plan ended.) For plan years that ended on or after October 1, 2018 and before October 1, 2019, the fee is $2.45 multiplied by the average number of lives. This count should include lives of employees and their dependents covered for the plan year.

There are four different methods that can be used for calculating the average number of lives covered under the policy, which are highlighted in the instructions on page 9 (go here to access: https://www.irs.gov/forms-pubs/about-form-720)

 The four different methods include:

· The actual count method

· The snapshot method

· The member months method, and

· The state form method

Form 720 can be accessed here: https://www.irs.gov/pub/irs-pdf/f720.pdf

More information on the Patient-Centered Outcomes Research Trust Fund Fee can be found on the following website: https://www.irs.gov/affordable-care-act/patient-centered-outcomes-research-trust-fund-fee-questions-and-answers

While we are waiting to hear what the fee will be for plans ending on or after October 1, 2019 and before October 1, 2020, the calculation used will be the same – taking the amount released by the ACA and multiplying it by the average number of lives on the policy.

Should you have questions or would like to discuss with Blue Chip Benefits, please reach out to us at Team@BlueChipBG.com or by calling (888) 225-8244. We are here to support you!

Stay healthy and strong!

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