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If you have a health plan that is self-insured or you are an insurer providing specified health coverage, then it is high time you file and pay the PCORI fee (Patient-centred Outcomes Research Institute fee) as required by the Affordable Care Act (ACA). The funds generated by this annual payment are used to finance research projects attempting to improve healthcare outcomes. 

The PCORI fee is, therefore, applicable to the issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans. The issuance of employer-sponsored health plans, HRAs, FSAs, and certain retiree-only plans falls under the purview of the PCORI fee. Knowing whether your organization qualifies as a liable entity is the first step toward compliance. The IRS provides detailed instructions on who must file Form 720 and how to calculate the appropriate fee based on average covered lives.

PCORI fees are reported and paid annually using IRS Form 720, specifically the second quarter form (due by July 31 each year). However, even if you do not normally file Form 720, you must submit it for the quarter in which the payment is due for PCORI.

You must then establish the average number of covered lives in your calculation of the proper PCORI fee per plan. The IRS permits several different methods, such as the Actual Count Method, Snapshot Method, or Form 5500 Method. To ensure accurate capture of the number of covered lives and minimize the risk of IRS audits.. 

After having calculated the amount due, fill out IRS Form 720, Part II, showing the appropriate PCORI fee entered for the proper plan year. Indicate the tax period and use the correct rate per covered life for that year (as rates vary annually). Send your form along with your payment to IRS, either electronically or through mail. 

After filing, retain copies of your completed Form 720, calculation worksheets, and proof of payment for your records. These documents are essential in case of an IRS audit or internal review. Make sure to track future rate changes and due dates. 

Adhering to these steps by employers and insurers lays a sure foundation for timely and accurate filing of PCORI fees, thus protecting against penalties while fulfilling all requirements outlined in ACA legislation.