IRS Announces PCORI Fee Increase

06.15.20

The Internal Revenue Service (IRS) issued a notice last week announcing an increase in the dollar amount used to determine the Patient-Centered Outcomes Research Institute (PCORI) fee for the upcoming plan year.

The applicable dollar amount to be used for plan years ending on or after October 1, 2019, and before October 1, 2020, is $2.54.  The 9-cent increase from the previous year reflects increases in the projected per capita amount of national health expenditures in the coming months. Employers that sponsor self-funded medical plans must report and pay their PCORI fee by July 31, 2020.

To recap, on December 20, 2019, President Trump signed the “Further Consolidated Appropriations Act, 2020” which reinstated the PCORI fee paid by health plans for an additional 10 years. Under the Act, the PCORI fee is now extended to plan years ending on or before September 30, 2029, and the last payment for calendar year plans will be July 31, 2029.

While updating the fee, the IRS also provided some welcome transition relief for those that may have been caught unaware of the PCORI fee’s survival. As in years past, insurers and self-insured plan sponsors may use one of several specified methods to calculate the fee. However, acknowledging that many may not have counted their employees during 2019 when the PCORI fee was supposed to sunset, the IRS is permitting the use of any “reasonable method” to calculate the fee. The transition relief applies to policy years and plan years ending on or after October 1, 2019, and before October 1, 2020. If a reasonable method is used to calculate the average number of covered lives then that reasonable method must be applied consistently for the duration of the year.

Since September 2012, this fee has been imposed on health insurance policy issuers and self-funded health plan sponsors.  It is a provision of the Affordable Care Act (ACA) aimed at ensuring consistent funding for the PCORI. 


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