Patient-Centered Outcomes Research Fee Facts
1. WHAT is this fee?
- The Patient Protection and Affordable Care Act (aka Obamacare) established the Patient-Centered Outcomes Research Institute (PCORI) to promote the use of evidence-based medicine
- To fund the PCORI, a fee is being imposed on health insurers and employers who sponsor self-insured health plans
2. WHO does this fee apply to?
- Issuers of specified health insurance policies (i.e. health insurance companies)
- Plan sponsors of applicable self-insured health plans (i.e. employers)
- The fee can apply to both a health insurance company and the employer if the employer has a fully-insured plan but still offers health insurance benefits that are self-funded (i.e. a health reimbursement arrangement)
3. WHEN does this fee begin?
- The fee begins with plan years that end on or after October 1, 2012
- The fee will be collected for seven years
4. WHEN is this fee due?
- The fee is due no later than July 31 of the calendar year immediately following the last day of the plan year
- First fee payment is due July 31, 2013 if the plan year ended anytime between October 1, 2012 and December 31, 2012
5. HOW is this fee calculated?
- For plan years ending before October 1, 2013, the fee is $1 times the average number of lives covered under the policy for that plan year
- For plan years ending after September 30, 2013 and before October 1, 2014, the fee will increase to $2 times the average number of lives covered
- For subsequent years, the applicable dollar amount will be adjusted to reflect inflation
- All individuals who are covered during the plan year must be counted (i.e. an employee and his dependent child would be counted as two separate covered lives unless the plan is a health reimbursement arrangement or flexible spending arrangement)
6. WHERE is this fee reported?
- The fee will be reported on Form 720 (Quarterly Federal Excise Tax Return) and can be found in Part II IRS No. 133
- The fee is required to be reported annually on the second quarter Form 720 and paid by its due date, July 31
- If the employer only files Form 720 to report the fee, they are not required to file Form 720 for the 1st, 3rd, and 4th quarters of the year
- The fee does not apply to exempt governmental programs such as Medicare, Medicaid, etc.
- The fee does not apply to health insurance policies and self-insured plans that provide only excepted benefits, such as plans that offer benefits limited to vision or dental benefits and most flexible spending arrangements
8. Miscellaneous Info
- The PCORI fee is tax-deductible