The Patient-Centered Outcomes Research Trust Fund fee, often referred to as the PCORI fee, can be a source of confusion for employers offering health insurance plans. This article aims to simplify what the PCORI fee is, why it exists, and how it impacts your business.
What is the PCORI Fee?
The PCORI fee is an annual charge levied on most health insurance plans and self-funded employer health plans. It was established by the Affordable Care Act (ACA) to fund the Patient-Centered Outcomes Research Institute (PCORI).
What Does PCORI Do?
PCORI is an independent, non-profit organization dedicated to conducting research on the effectiveness of different medical treatments and approaches. Their research helps patients, caregivers, and healthcare providers make more informed decisions about treatment options.
The IRS offers useful resources, including a chart that explains how the fees apply to different types of health coverage and arrangements.
How Much is the PCORI Fee?
The PCORI fee is calculated based on the average number of lives covered under a plan during the policy year. The fee amount is adjusted annually based on inflation in National Health Expenditures. Here’s a quick breakdown:
- For plans ending after September 30, 2023 and before October 1, 2024: The applicable dollar amount is $3.22 per covered life.
- For plans ending after September 30, 2022 and before October 1, 2023: The applicable dollar amount is $3.00 per covered life.
Who Pays the PCORI Fee?
The PCORI fee is generally paid by the issuer of a health insurance plan or the plan sponsor of a self-funded health plan. Employers offering group health plans will typically see the PCORI fee reflected in their health insurance premium statements.
When is the PCORI Fee Due?
The PCORI fee is typically due on July 31st of the year following the last day of the plan year.
Are There Any Exemptions?
Certain types of health plans are exempt from the PCORI fee, including:
- Health Reimbursement Arrangements (HRAs)
- Certain government-funded plans (Medicare, Medicaid)
- Some limited-flexibility plans
The Bottom Line:
The PCORI fee is a relatively small annual cost that helps fund valuable research in patient-centered outcomes. Understanding the purpose and calculation of the PCORI fee can help employers better manage their health insurance expenses and contribute to the advancement of healthcare knowledge.
Additional Resources:
- Patient-Centered Outcomes Research Trust Fund fee: Questions and answers – IRS https://www.irs.gov/newsroom/patient-centered-outcomes-research-institute-fee
- Patient-Centered Outcomes Research Institute (PCORI) https://www.pcori.org/