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Jun 10

Jessica Rothe

PCORI Fee Overview

by Jessica Rothe

Patient-Centered Outcomes Research Institute (PCORI) Fee Overview

Health care reform created a new nonprofit corporation, the Patient-Centered Outcomes Research Institute, to support clinical effectiveness research. This entity will be funded in part by fees (referred to as “PCORI fees” or “CER fees”) paid by certain health insurers and applicable sponsors of self-insured health plans.

Effective Date:

PCORI fees are payable in connection with “specified health insurance policies” and “applicable self-insured health plans”. These fees apply to policy and plan years ending after October 1, 2012 and before October 1, 2019 (i.e. for seven full policy or plan years). For calendar-year policies/plans, the fees would apply for calendar policy/plan years 2012 through 2018.

Payment and Reporting of Fees:

PCORI fees are to be reported and paid once a year, even though they are reported on IRS Form 720 (Quarterly Federal Excise Tax Return). Reports and payments are due no later than July 31 of the year following the last day of the policy or plan year. Thus, for example, a return that reports liability for the fee imposed on a health insurance policy for the year ending on December 31, 2012 must be filed by July 31, 2013. Similarly, a return that reports liability for a self-insured health plan for the plan year ending on January 31, 2013, must be filed by July 31, 2014.

PCORI fees for Fully Insured Plans are paid and reported directly by the Insurance Carrier, but self-funded Plans do not have the option to use a 3rd party. The Plan Sponsor must submit the form and payment.

Calculating the Fee:

The fee imposed to both an insurer as well as the Plan Sponsor of a self-insured health plan is based on the average number of lives covered under the plan. Notably, this means not just employees covered under the plan, but dependents as well.

Methods to Count Employees:

There are three available counting methods for the PCORI Fee (1) Actual Count Method, (2) Snapshot Method, and (3) Form 5500 Method.

Treatment of Multiple Self-Insured Arrangements:

If the same plan sponsor maintains more than one arrangement that provides self-insured accident or health coverage (e.g. if the sponsor maintains an HRA or health FSA in addition to major medical coverage), the arrangements can be treated as a single self-insured health plan if the arrangements have the same plan year for purposes of calculating the fee. Similarly, if the sponsor maintains self-insured medical coverage and a separate self-insured arrangement with the same plan year providing prescription drug benefits, the two arrangements may be treated as one applicable self-insured health plan so that the same life covered under each arrangement would count as only one covered live under the plan.


The information contained herein is not intended to be legal advice, and while every effort has been made to ensure that the content of this legislative summary is accurate, we makes no representations or warranties in relation to the information provided, and assumes no liability or responsibility for any acts or omissions based on this information. As always, we encourage you to consult with your own legal counsel prior to making any decisions regarding plan design or administration.