For employers who sponsor self-insured health plans, the annual fee to help fund the Patient-Centered Outcomes Research Institute (PCORI) is due by July 31, 2017. The fee should be filed on the employer’s second quarter Quarterly Federal Excise Tax Return, IRS Form 720.

The amount of the fee is adjusted each year for inflation. All plan sponsors are responsible to remit payment for the PCORI fee in 2017, but the amount of the fee paid per covered member will vary depending on when the plan year ends.

Health insurers file and remit the PCORI fee for fully insured plans. However, for self-funded plans, the employer/plan sponsor is responsible for submitting the fee and accompanying IRS tax form to the IRS. As a best practice, confirm with your third-party benefit administrator prior to filing and remitting payment, as some third-party administrators of self-funded plans will collect and file the fee on an employer’s behalf.

Health Reimbursement Accounts (HRAs) are subject to the PCORI fee, however, Health Savings Accounts (HSAs) and most Flexible Spending Accounts (FSAs) are not. Generally, a separate fee applies for lives covered by each health insurance policy or self-funded plan. However, if an employer has multiple self-insured health plans with the same plan sponsor and the same plan year, such as a medical plan and an HRA, employers may treat those plans as a single applicable self-insured plan.

How to determine your PCORI fee

What is your Company Plan Year End Date? The Fee Per Covered Life That Will Apply PCORI Fee Due Date
1/1/2016 – 9/30/2016 $2.17 7/31/2017
10/1/2016 – 12/31/2016 $2.26 7/31/2017

Use one of these three methods to determine the average number of lives (including employees, dependents, and COBRA enrollees) covered by a plan.

  1. Actual CountThe total number of lives covered by the plan on each day of the first 9 months of the plan year, divided by the total number of days in the 9 month period.
  2. Snapshot – The total number of lives covered by the plan in each of the first three quarters of the plan year, divided by the total number of dates used.
    • A “snapshot factor” method may also be used: using the same date in each of the first 3 quarters of the plan year, count the number of participants who elected coverage other than self-only and multiply by 2.35. Add that total to the number of participants who elected self-only coverage.
  3. Form 5500 Use the sum of the number of participants covered under both self-only coverage and all other enrollment tiers (including EE+SP, EE+CH, Family). Take the average of the total number of participants at the beginning and end of the plan year as reported on lines 5 and 6(a)-(c) of Form 5500.
    • Note: Because the PCORI Fee is paid on the preceding plan year, employers may only use 5500 data if the 5500 is filed on or before July 31, 2017. If your company utilized the 2 ½ month filing extension, it is ineligible to use the 5500 count method.

Reminder to Health e(fx) clients: Your Health e(fx) system provides tools for calculating the number of covered lives and the PCORI fee using all methods described above to remit before 7-31-2017.