Just a quick reminder to those who sponsor self-insured plans!  The PCORI Fee Payments are due by July 31.

Employers currently relaxing after fulfilling year-end and first-quarter compliance requirements may be inclined to continue doing so during the summer months (unless, of course, you have fiscal year-end instead of a calendar year-end).  However, before running off for vacation, those employers sponsoring self-insured plans are reminded that the annual PCORI (Patient-Centered Outcomes Research Institute) Fee Payments are due July 31st. Below is a summary of the PCORI Fee calculation, to which health plans it applies, and the appropriate form used for filing

1.  Who Must File and Pay PCORI Fees?  The PCORI Fee applies to health plans; however, responsibility for calculating and paying the PCORI fee will depend on the health plan’s funding status (e.g., fully insured or self-insured).

a.  Except with respect to certain specified exceptions (described below), health insurance plans, including employer-sponsored group health plans (PPOs, HMOs, Rx, etc.) for employees, retirees and COBRA participants are subject to the PCORI fee.  Insurers are responsible for paying the fee for all health insurance policies.  

b.  Self-Insured Health Plan: A self-insured health plan established or maintained by employers for their workers and/or retirees is subject to the PCORI Fee.  The plan sponsor (employer) is responsible for calculating and paying the fee for its self-insured health plans. 

c.  Exceptions:  The following types of plans are exempt from the PCORI Fee obligation:

  • Plans providing HIPAA-excepted benefits, which generally include stand-alone dental and vision plans, on-site medical clinics, and health flexible spending accounts (health FSAs) so long as employees have other group health coverage available and the employer does not contribute more than $500 to each health FSA.  
  • Employee assistance plans, disease management programs, or wellness programs so long as the plan or program does not provide significant benefits for medical care or treatment.
  • Health savings accounts (HSAs).
  • Stop-loss insurance policies.  

2.  How Much is the PCORI Fee?  The fee is calculated based upon the average number of covered lives during the relevant plan year, which is then multiplied by the rate in effect on the plan year ending date.  Note: health FSAs and HRAs to which the PCORI Fee applies must count only employee participants, not dependents. 

a. Plan years ending between October 1, 2016, but before October 1, 2017: $2.26

b. Plan years ending between October 1, 2017, but before October 1, 2018: $2.39

3.  How to Calculate the PCORI Fee?  Several methods are permitted to be used to calculate the PCORI Fee so long as the same method is used consistently throughout the relevant plan year. However, the method chosen may be changed from plan year to plan year.

a. Average Count Method:  Count the number of covered lives each day of the plan year and divide by the number of day in the plan year.

b. Snapshot Count Method:  Count the number of covered lives for a particular day during each quarter and divide by four.  This method has been found to be the most practical as covered lives can easily be determined from the billing statement.

c. Form 5500 Method:  Add beginning and ending participating employee count (or participant count for plans offering dependent coverage) and divide by 2.

4. How is the PCORI Fee paid?  

Payors complete Form 720 and remit payment to the address listed in the Form 720 Instructions on or before July 31st of the year following the end of the plan year.