The ACA imposes a fee on health insurance issuers and plan sponsors of self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee, called the Patient-Centered Outcomes Research Institute (PCORI) fee, is calculated based on the average number of lives covered under the policy or plan.
The fee applies to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. The PCORI fee is filed using IRS Form 720, Quarterly Federal Excise Tax Return. Form 720 must be filed annually, by July 31 of each year.
Special Rule for Coverage Under Multiple Applicable Self-insured Health Plans
Generally, separate fees apply for lives covered by each specified health insurance policy or applicable self-insured health plan. However, two or more applicable self-insured health plans may be combined and treated as a single applicable self-insured health plan for purposes of calculating the PCORI fee if the plans have the same plan sponsor and the same plan year.
For example, if amounts in a health reimbursement arrangement (HRA) may be used to pay deductibles and copays under a specified health insurance policy, the HRA and the insurance policy would be subject to separate PCORI fees. However, an HRA that may be used to pay deductibles and copays under an applicable self-insured health plan is not subject to a separate fee if both the HRA and the applicable self-insured health plan have the same plan sponsor and the same plan year.
There is no similar rule for lives covered by more than one insurance policy subject to the PCORI fee.
Special Counting Rule for HRAs and FSAs
Plan sponsors are permitted to assume one covered life for each employee with an HRA, even if the HRA can reimburse expenses of the employee’s family members. Similarly, plan sponsors are permitted to assume one covered life for each employee with a flexible spending account (FSA).
Qualified Small Employer HRA (QSEHRA)
Plan sponsors of applicable self-insured health plans must file Form 720 annually to report and pay the PCORI fee; a QSEHRA is an applicable self-insured health plan for this purpose.
Links and Resources
Please see the following IRS resources for more information on the ACA’s PCORI fees: