IRS Announces New PCORI Fee
October 20, 2023
The Affordable Care Act (ACA) imposes a fee on self-funded plan sponsors and health insurance issuers known as Patient-Centered Outcomes Research Institute (PCORI) fees. These fees were originally applicable for plan years ending between October 1, 2012 and September 30, 2019. However, in 2019 the PCORI fees were extended for an additional 10 years.
The Internal Revenue Service (IRS) issued Notice 2023-70 which provides the PCORI fee for plan years ending October 1, 2023, through September 30, 2024, which will be $3.22 multiplied by the average number of covered lives. This is up slightly from $3.00 for plans ending in the prior 12-month period.
To calculate the average number of covered lives, one of the below methods must be used:
- Actual count method
- Snapshot method
- Form 5500 method (applicable only to self-funded plan sponsors)
- Member months method (applicable only to health insurance issuers)
- State form method (applicable only to health insurance issuers)
The PCORI fee is reported and paid annually on IRS Form 720. These fees are due July 31 of each year for the plan year that ended in the prior calendar year. Therefore, the deadline for filing Form 720 is July 31, 2024, for plan years that end in 2023.
If you have questions about how to calculate the average number of lives, which plans need to be reported, or any other questions regarding PCORI fees, please contact your Hylant representative.
The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.
Holly Wahl, EB Compliance Practice Leader
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