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Understanding the conditions underlying your ACA PCORI charge becomes essential to the policy of compliance if your company offers a self-insured health plan. One of the goals of the Patient-Centred Outcomes Research Institute (PCORI) fee, a tax included in the Affordable Care Act (ACA), is to fund studies on comparative effectiveness. Making a mistake during the filing or payment period will result in additional penalties and interest, even if it might seem like a little annual amount. These are the specifics. 

Incidentally, plan sponsors of applicable self-insured health plans and health insurance issuers on specific policies both pay the PCORI charge. The latter program provides funding for studies that examine the effectiveness of medical treatments. Employers are responsible for filing Form 720 to pay the IRS fee associated with self-insured health plans, including those that contain HRAs (Health Reimbursement Arrangements). In the event of self-insured plans, the employer receives the points because an insurance provider managing fully insured plans must inevitably bear the fee charge. 

Regardless of the size or number of employees, the employer who implements a self-insured health plan is required to pay the PCORI charge. This is applicable to all businesses that have Minimum Essential Coverage (MEC) or Level-Funded plans. Whether the health plan covers a small number of employees or retirees is irrelevant; you will still be liable. To ensure the accuracy of the reporting process that follows, employers must first determine if their plans qualify and then determine the average number of covered lives in the relevant plan year. 

Usually paid once a year, the PCORI fee must be recorded and paid using Form 720, which is typically completed by July 31 for plans that concluded the prior year. Each plan year has a different charge cost for the private health insurance policy; for instance, in 2024, the fee rate will be $3.22 per insured person. Businesses are in charge of making sure that the right cost is paid and that the number of covered lives is calculated using one of the various IRS-approved methods available. 

Make sure you maintain accurate records of the health plan members and verify the filing date each year in order to stay in compliance. You may find the reporting process easier if you track covered lives using payroll or benefits software. Before proceeding, employers who are unsure about the filing or calculating procedure should speak with a tax expert or HR compliance provider. The IRS may take interest or take enforcement action if the deadline is missed or if the charge is less than what is required.