What Business Owners Need To Know About the PCORI Fee

The Affordable Care Act has created several new mandates and fees that many business owners need to know about. The Patient-Centered Outcomes Research Institute (PCORI) tax is another fee that impacts businesses offering Health Reimbursement Arrangements or HRA’s.

The PCORI tax or fee was imposed by the Affordable Care Act (ACA) on issuers and plan sponsors of individual and group health plans. Health reimbursement arrangements (HRAs) are considered self-insured plans under the ACA law, so if your company offers an HRA in your benefits program, you are responsible for the fee.

When and How to File The PCORI Fee

The fee is due July 31 of the calendar year that follows the plan year end date. For instance, fees for plans that ended between January 1, 2013 and December 31, 2013 are due on July 31, 2014.

The tax is determined upon the number of covered or insured lives and could vary each year:

For plans ending on or after October 1, 2012 through September 30, 2013, the fee is $1 per covered life per year.

For plans ending October 1, 2013 through September 30, 2014, the fee is $2 per covered life.
For HRAs, each employee enrolled in an HRA counts as a covered life – dependents do not count.

The fees will be indexed each year and are tax deductible under IRS Tax Code Section 162(a). To report and pay the PCORI tax, your clients must file Form 720, the Quarterly Federal Excise Tax Return, available on the IRS website.

For more information about filing the PCORI tax to the IRS you should contact your tax advisor or someone who is knowledgeable regarding the ACA regulations. Other questions about HRAs can be directed to our health specialists at: 914-633-1717.