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PCORI fee is a tax imposed by the IRS on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans, the whole process of which is represented by the Patient-Centered Outcomes Research Institute (PCORI), The purpose of this fee is to fund research that helps improve healthcare decisions and outcomes for patients. Companies that have self-insured health plans are obliged to fill out and submit Form 720, thus annually report and pay this fee.

Form 720 is a quarterly federal excise tax return, and it is usually filed once a year for the PCORI fee, that is by July 31 following the end of the plan year. Employers and plan sponsors must calculate the fee based on the average number of covered lives under their plan and apply the applicable rate for that year. You may file Form 720 either by mailing a paper copy to the IRS or through an approved IRS e-filing service.

Always remember that incorrectly calculated PCORI fees can be penalized and also it is very essential to be aware of the methods of calculating the PCORI fee that are permitted by the IRS. The per covered life fee is adjusted annually for inflation, thus it is imperative to always confirm the right rate on the IRS website. Consistent and proper records of employee health plan enrolments have a vital role which allows for the accuracy of the calculations.

Often, companies neglect their obligation to file the PCORI fee as they are not sure whether they have to pay the fee or not, often, these are firms that manage their own self-insured health plans. To avoid any of the penalties that may come along with the delay in payment and to stay compliant, make sure to note down the July 31 deadline and contact a tax professional or use well-established platforms for e-filing of Form 720. Meeting the IRS requirements and avoiding fines that are unnecessary are the definite results provided you file accurately and on time.