PCORI Fee at a Glance
| PCORI Requirement | General Rule |
|---|---|
| IRS Number | 133 |
| Form | Form 720 |
| Form 720 Section | Part II |
| Applies To | Specified health insurance policies and applicable self-insured health plans |
| Generally Paid By | Insurance issuer or self-insured plan sponsor |
| Calculation | Average Covered Lives × Applicable PCORI Rate |
| Filing Frequency | Annually |
| Form 720 Quarter | Second Quarter |
| General Due Date | July 31 |
| Excise Tax Deposits | Not Required |
| PCORI Rate | Adjusted periodically |
Because the PCORI rate is periodically adjusted, use the applicable IRS rate for the policy or plan year being reported.
What Is the PCORI Fee?
The PCORI Fee helps fund the Patient-Centered Outcomes Research Trust Fund.
It generally applies to:
- Issuers of specified health insurance policies
- Sponsors of applicable self-insured health plans
The amount due is generally calculated using the average number of lives covered under the applicable policy or plan.
Depending on the plan and counting method, covered lives can include:
- Employees
- Spouses
- Dependents
- Other individuals receiving applicable coverage
The rules differ for insured and self-insured coverage, so the type of health plan should be identified before calculating the fee.
Who Is Responsible for the PCORI Fee?
Responsibility depends on how the health coverage is provided.
Insured Health Plans
For a specified health insurance policy, the health insurance issuer is generally responsible for reporting and paying the PCORI Fee.
An employer generally does not file the PCORI Fee for an insured policy when the insurance issuer is responsible for it.
Self-Insured Health Plans
For an applicable self-insured health plan, the plan sponsor is generally responsible for reporting and paying the fee.
Depending on the arrangement, the plan sponsor may be an employer, employee organization, or another entity treated as the plan sponsor under applicable rules.
What Health Plans May Be Subject to the PCORI Fee?
The PCORI Fee can apply to specified health insurance policies and applicable self-insured health plans providing accident or health coverage.
Depending on the arrangement, coverage can include certain:
- Employer-sponsored health plans
- Self-insured medical plans
- Retiree health plans
- Health Reimbursement Arrangements (HRAs)
- COBRA continuation coverage
- Multiemployer health plans
- Other qualifying accident and health coverage
Whether a particular arrangement is subject to the fee depends on how the coverage is structured and whether an exclusion applies.
What Coverage Is Generally Excluded?
Not every health benefit is subject to the PCORI Fee.
Certain coverage or arrangements can be excluded, including applicable:
- Medicare
- Medicaid
- Children's Health Insurance Program coverage
- Certain Armed Forces and veterans programs
- Certain programs for members of Indian tribes
- Excepted-benefit dental coverage
- Excepted-benefit vision coverage
- Qualifying health flexible spending arrangements
- Certain employee assistance programs
- Certain disease management programs
- Certain wellness programs
- Certain coverage primarily for employees working and residing outside the United States
The facts of the health coverage should be reviewed before determining whether an exclusion applies.
How Is the PCORI Fee Calculated?
The basic PCORI Fee calculation is:
The applicable PCORI dollar amount is adjusted periodically.
For this reason, filers should use the rate that applies to the ending date of the applicable policy year or plan year.
Example
Assume an applicable self-insured health plan has:
- 500 average covered lives
- An applicable PCORI rate of $X per covered life
The calculation is:
The actual IRS rate for the applicable plan year should be used when preparing Form 720.
How Are Average Covered Lives Determined?
The IRS provides different permitted methods for determining average covered lives depending on whether the filer is an insurance issuer or a sponsor of an applicable self-insured health plan.
Specified Health Insurance Policies
Issuers generally may use an applicable method such as:
- Actual Count Method
- Snapshot Method
- Member Months Method
- State Form Method
Applicable Self-Insured Health Plans
Plan sponsors generally may use:
- Actual Count Method
- Snapshot Method
- Form 5500 Method
The selected method should meet applicable IRS requirements, and records supporting the calculation should be maintained.
Actual Count Method
Under the Actual Count Method, the filer generally adds the number of lives covered for each day of the policy or plan year and divides the total by the number of days in that year.
Because this method uses daily coverage information, accurate enrollment records are important.
Snapshot Method
The Snapshot Method generally uses the number of covered lives on selected dates during each quarter of the policy or plan year.
The selected dates and calculation must satisfy applicable IRS requirements. For self-insured plans, permitted variations of the snapshot method can be used when the applicable requirements are met.
Form 5500 Method
Sponsors of applicable self-insured health plans may be able to use the Form 5500 Method.
This method uses participant information reported on Form 5500 to determine average covered lives. The calculation can differ depending on whether the plan provides only self-only coverage or also provides coverage beyond the employee.
Special Rules for HRAs
A Health Reimbursement Arrangement (HRA) can be an applicable self-insured health plan for PCORI purposes.
Under the special counting rule for applicable HRAs, a plan sponsor may generally count one covered life for each employee with an HRA.
When an employer maintains multiple self-insured arrangements, additional rules can determine whether the arrangements may be treated as one plan. Two or more applicable self-insured health plans may generally be treated as a single plan for PCORI purposes when they have the same plan sponsor and the same plan year, subject to applicable requirements.
An employer that offers an insured health plan together with a self-insured HRA should also review whether a separate PCORI obligation applies to the HRA.
Short Plan Years
The PCORI Fee can apply to an applicable plan with a short plan year.
A short plan year can occur when:
- A new plan begins during the year
- A plan changes its plan year
- A plan terminates during the year
- Another event creates a plan year shorter than 12 months
The fee is generally calculated using the average number of covered lives during the applicable short plan year multiplied by the applicable PCORI rate.
A short plan year does not automatically eliminate the PCORI Fee requirement.
How Is the PCORI Fee Reported on Form 720?
The PCORI Fee is reported in Part II of Form 720 under IRS No. 133.
The filer generally needs to determine:
- Policy or plan type
- Policy or plan year ending date
- Average number of covered lives
- Applicable PCORI rate
- Total PCORI Fee
Form 720 provides separate reporting for specified health insurance policies and applicable self-insured health plans.
The applicable amounts are used to determine the total fee reported under IRS No. 133.
When preparing the return through Excise720, you can enter the applicable PCORI information as part of the Form 720 filing process.
When Is the PCORI Fee Due?
The PCORI Fee is generally reported annually, even though Form 720 is normally a quarterly return.
The fee is reported on the second-quarter Form 720 and is generally due by July 31 of the calendar year immediately following the end of the applicable policy or plan year.
In simple terms:
If July 31 falls on a Saturday, Sunday, or legal holiday, the applicable business-day rule generally applies.
Do PCORI Filers File Form 720 Every Quarter?
Not necessarily.
If a filer is required to file Form 720 only because of the PCORI Fee, Form 720 is generally filed only for the second quarter.
The filer generally does not need to file first-, third-, or fourth-quarter Form 720 returns solely because it has a PCORI Fee obligation.
However, a business responsible for other Form 720 taxes may have separate quarterly filing requirements.
Are Deposits Required for the PCORI Fee?
No.
The PCORI Fee is not subject to federal excise tax deposit requirements.
The applicable fee is generally paid when the second-quarter Form 720 is filed.
This is different from certain Part I Form 720 taxes that can require semimonthly deposits.
Information Needed for PCORI Filing
Before preparing Form 720, gather information relevant to the applicable policy or plan. Useful information can include:
- Business, issuer, or plan sponsor name
- Employer Identification Number (EIN)
- Type of health coverage
- Policy or plan year beginning date
- Policy or plan year ending date
- Average number of covered lives
- Covered-life counting method
- Applicable PCORI rate
- Enrollment records
- HRA information when applicable
- Form 5500 information when applicable
- Information about multiple self-insured arrangements
The policy or plan year ending date is particularly important because it determines the applicable PCORI rate and filing period.
How to Prepare for PCORI Fee Filing
Before filing:
- Determine whether the coverage is subject to the PCORI Fee.
- Identify whether the coverage is insured or self-insured.
- Determine who is responsible for the fee.
- Confirm the policy or plan year dates.
- Select an applicable covered-lives calculation method.
- Calculate the average number of covered lives.
- Identify the applicable PCORI rate.
- Calculate the total PCORI Fee.
- Report the fee under IRS No. 133.
- Maintain supporting records.
Once the required information is ready, Excise720 can be used to prepare and electronically file the PCORI Fee on Form 720.
Common PCORI Fee Filing Mistakes
- Using the wrong PCORI rate: The applicable rate depends on when the policy or plan year ends and is periodically adjusted.
- Counting covered lives incorrectly: The permitted methods differ for insurance issuers and self-insured plan sponsors.
- Counting only employees: Depending on the plan and counting method, spouses, dependents, and other covered individuals may need to be included.
- Assuming every employer pays the fee: For an insured policy, the health insurance issuer is generally responsible for the PCORI Fee.
- Missing an HRA: Certain HRAs can be applicable self-insured health plans and may create a separate PCORI obligation.
- Ignoring multiple-plan rules: Certain self-insured arrangements with the same sponsor and plan year may be treated as one plan.
- Filing in the wrong quarter: The PCORI Fee is generally reported on the second-quarter Form 720.
- Filing every quarter only for PCORI: A filer with no other Form 720 liability generally files only the second-quarter return for PCORI.
- Making unnecessary deposits: Federal excise tax deposits are not required for the PCORI Fee.
PCORI Fee Filing Checklist
Before filing, confirm that you have:
- Determined whether the coverage is subject to PCORI.
- Identified the responsible filer.
- Confirmed the policy or plan year.
- Selected an applicable counting method.
- Calculated average covered lives.
- Used the applicable PCORI rate.
- Reviewed HRA rules when applicable.
- Reviewed multiple-plan rules when applicable.
- Calculated the total fee.
- Selected IRS No. 133.
- Prepared the second-quarter Form 720.
- Maintained supporting records.
PCORI Fee Filing Pricing
One flat price for filing your Form 720 — including the applicable PCORI Fee reported under Part II, Line 133.
- Covers PCORI Fee reporting on Form 720
- Supports specified health insurance policies and applicable self-insured health plans
- Guided covered-lives entry and automatic fee calculation
- Electronic filing and filing status included
Frequently Asked Questions
What is the PCORI Fee?
The PCORI Fee is a federal fee that generally applies to issuers of specified health insurance policies and sponsors of applicable self-insured health plans.
What IRS number is used for the PCORI Fee?
The PCORI Fee is reported in Part II of Form 720 under IRS No. 133.
Who pays the PCORI Fee for an insured health plan?
The health insurance issuer is generally responsible for reporting and paying the fee.
Who pays the PCORI Fee for a self-insured plan?
The plan sponsor is generally responsible for reporting and paying the fee.
How is the PCORI Fee calculated?
The fee is generally calculated by multiplying the average number of covered lives by the applicable PCORI rate.
Does the PCORI rate change?
Yes. The applicable dollar amount is periodically adjusted, so use the rate for the applicable policy or plan year.
When is the PCORI Fee due?
The fee is generally reported on the second-quarter Form 720 and due by July 31 of the following calendar year.
Do PCORI filers need to file Form 720 every quarter?
No. A filer with no other Form 720 liability generally files only the second-quarter return for the PCORI Fee.
Are excise tax deposits required for PCORI?
No. Federal excise tax deposits are not required for the PCORI Fee.
Can I file the PCORI Fee online?
Yes. Excise720 supports electronic Form 720 filing for the PCORI Fee under IRS No. 133.
File Your PCORI Fee Online With Excise720
PCORI Fee filing requires identifying the applicable coverage, determining who is responsible for the fee, calculating average covered lives, using the applicable PCORI rate, and reporting the amount under IRS No. 133. Excise720 provides online Form 720 e-filing for the PCORI Fee.
You can enter your applicable policy or plan information, report average covered lives, prepare the PCORI section of Form 720, review the return, and electronically submit it.