IRS Releases PCORI Fee Due Date
The 2021 PCORI fee filing is due by August 2, 2021. The deadline is always July 31, but due to the filing date occurring on a Saturday it is delayed until the following business day. The fee is payable in connection with Health Reimbursement Arrangements (HRAs) for policy/plan years ending after October 1, 2012 but stop applying for policy/plan years ending after September 30, 2029.
If an employer utilizes the Section 105 BASE® HRA, QSE HRA, ICHRA, or Integrated HRA, they should check out the IRS Form 720 on how to handle the PCORI fee. Not all HRA clients will be required to pay the fee per IRS and Department of Labor (DOL) guidance.
- HRA (only 1 employee) - Business owners with these HRA plan designs in place are exempt from paying the PCORI fee. (Note: QSE HRA plans must pay fee regardless of participant size according to Notice 2017-67).
- HRA (2 or more employees) - Business owners with two or more employees that have an HRA in place are still required to pay the fee by August 2, 2021.
IMPORTANT TO NOTE: Employers are responsible to report, file, and pay this fee once a year, no one can file on their behalf. A current form can be found here, with instructions. Employers that fail to pay the fee, or the incorrect amount, could be subject to penalties.
How is the PCORI fee calculated? The fee is imposed on a plan sponsor/employer of an HRA and is based on the number of participating employees covered under the plan. The fee will be adjusted annually for inflation based on increases in the projected per capita amount of National Health Expenditures. The current fee is $2.54 with a plan year ending before October 1, 2019, and $2.66 with a plan year ending on or after October 1, 2019, and before October 1, 2020.
Why did major industry groups push for a 10-year extension? The fee is imposed on health insurance issuers and self-insured health plan sponsors to fund the Patient-Centered Outcomes Research Institute (PCORI). Currently, it maintains a portfolio of research that addresses a wide variety of conditions and topics including assessment of prevention, diagnosis, and treatment options, including a COVID-19 prevention/treatment study, improving health care systems, and communications and dissemination research. The research projects also target certain populations of interest such as: racial and ethnic minorities, low socioeconomic status, women, and older adults and individuals with multiple chronic conditions. With annual incoming funds averaging about $480 million since 2014, the operation has paid for more than 700 projects that are influencing health care to justify the extension.
For complete instructions on completing the Form 720, please visit the IRS website.