On November 4, the IRS released Notice 2016-64 to announce that the health plan Patient-Centered Outcomes Research Institute (PCORI) fee for plan years ending between October 1, 2016 and September 30, 2017 is $2.26 per plan participant.
The Affordable Care Act created the PCORI to study clinical effectiveness and health outcomes. To finance the nonprofit institute’s work, a small annual fee — commonly called the PCORI fee — is charged on group health plans.
The fee is an annual amount multiplied by the number of plan participants. The dollar amount of the fee is based on the ending date of the plan year:
- For plan year ending between October 1, 2012 and September 30, 2013: $1.00.
- For plan year ending between October 1, 2013 and September 30, 2014: $2.00.
- For plan year ending between October 1, 2014 and September 30, 2015: $2.08.
- For plan year ending between October 1, 2015 and September 30, 2016: $2.17.
- For plan year ending between October 1, 2016 and September 30, 2017: $2.26.
For future years, the fee amount will be adjusted for inflation. The program sunsets in 2019, so no fee will apply for plan years ending after September 30, 2019.
Insurers are responsible for calculating and paying the fee for insured plans. For self-funded health plans, however, the employer sponsor is responsible for calculating and paying the fee. Payment is due by filing Form 720 by July 31 following the end of the calendar year in which the health plan year ends. For example, if the group health plan year ends December 31, 2016, Form 720 must be filed along with payment no later than July 31, 2017.
Certain types of health plans are exempt from the fee, such as:
- Stand-alone dental and/or vision plans;
- Employee assistance, disease management, and wellness programs that do not provide significant medical care benefits;
- Stop-loss insurance policies; and
- Health savings accounts (HSAs).
A health reimbursement arrangement (HRA) also is exempt from the fee provided that it is integrated with another self-funded health plan sponsored by the same employer. In that case, the employer pays the PCORI fee with respect to its self-funded plan, but does not pay again just for the HRA component. If, however, the HRA is integrated with a group insurance health plan, the insurer will pay the PCORI fee with respect to the insured coverage and the employer pays the fee for the HRA component.
The IRS provides the following guidance to help plan sponsors calculate, report, and pay the PCORI fee: