Ask the Experts: PCORI Fee and Self-Funded Plans

Question: How much and when do we pay for the PCORI fee for our self-funded health plan?

Answer: The Affordable Care Act imposes the Patient-Centered Outcomes Research Institute Fee (PCORI) on issuers of certain health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee is based on the average number of lives covered under the policy or plan and is due July 31following the calendar year in which the plan year ends.  Plan sponsors report the PCORI fee once a year on the second quarter IRS Form 720, “Quarterly Federal Excise Tax Return”.

Here are some quick facts about the fee:

  • The fee applies for each plan year ending between 10/1/2012 and 9/30/2019 only.   The fee is an annual amount multiplied by the number of plan participants:
    • $1 per year per participant for plan year ending between 10/1/2012 and 9/30/2013
    • $2 per year per participant for plan year ending between 10/1/2013 and 9/30/2014
    • For plan years ending between 10/1/2014 and 9/30/2019, the amount will be adjusted for inflation.
  • Insurers are responsible for calculating and paying the fee for insured health plans.  Employers sponsoring self-funded health plans are responsible for calculating and paying the fee with respect to those plans.
  • The fee generally applies to all group health plans, except:
    • HIPAA-excepted benefits
    • Plans that do not provide significant benefits for medical care or treatment (e.g., employee assistance,  disease management, and wellness programs)
    • Stop-loss insurance policies
    • Health Savings Accounts (HSAs)
  • Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods outlined in the final regulations to determine the average number of lives covered under a plan for the plan year:
    • Actual Count Method: Determined by adding the totals of lives covered for each day of the play year and dividing that total by the total number of days in the plan year.
    • Snapshot Method: Determined by selecting one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
    • Form 5500 Method: Determined by the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

For more information on PCORI fees for self-insured plans, visit: