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Calculating the Patient-Centered Outcomes Research Institute (PCORI) fee is a compliance requirement among employers, insurers, and plans that engage in self-insured health coverage. The annual fee is used to assist in financing research into the patient-centered outcomes regarding medical treatments and services. The IRS provides clear procedures for calculating and filing the PCORI fee: Here is a guide on how to calculate the PCORI fee.

The PCORI fee is an IRS fee that comes from the Affordable Care Act (ACA). It needs to be paid annually by insurers and certain self-insured health plans for the operations of PCORI. Employers and plan sponsors should file the fee using IRS Form 720.

Computation of the PCORI fee and payment of same ought to take place by:

*Health insurance issuers

*Plan sponsors of self-insured health plans

*Applicable large employers (ALEs) providing self-funded coverage

*Multiple Employer Welfare Arrangements (MEWAs)

The first step is to know whether your organization qualifies for the proper calculation and adherence.

To determine your PCORI liability, you will need to calculate the average number of covered lives for the plan year. The IRS provides several methods:

Add the total number of lives (employees + dependents) covered each day of the plan year and divide by the number of days.

Choose one day (or more) per quarter and count covered lives on that date. You can use the Snapshot Factor Method to simplify by multiplying participant counts by 2.35 (IRS estimate for dependents).

Only available for plans required to file Form 5500. Use the number of participants listed at the beginning and end of the year.

The rate for the PCORI fee varies according to the plan year end date. For example :

* For plan years that end October 2023 – September 2024, fee per covered life would be $3.22.

* For the plan years ending October 2022 – September 2023, it was $3.00 per covered life.

Check with the IRS website to get the latest PCORI fee rate before filing.

So your self-insured plan had, throughout a year that ends in March 2024, an average of 150 covered lives. The PCORI fee calculation would be:

150 covered lives x \$3.22 = \$483.00

This is the amount filed under "PCORI Fee" on Form 720 (Quarter 2 filing).

* Use IRS Form 720, "Quarterly Federal Excise Tax Return," to report payment and pay the PCORI fee.

* Most of the filers would have the due date as July 31 of the year following the end of the plan year.

* Ensure timely submission to avoid IRS penalties.

You can make sure you have a smooth PCORI fee filing by keeping records accurately and using the correct method of calculation. Compliance software or talking to a tax professional can be wise choices if you are not sure. 

Use this guide to calculate and file your PCORI fee accurately and on time the PCORI fee, fulfilling any obligations under the ACA, and maintaining compliance with the IRS-and all in a timely fashion.