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In order for the Patient-Centered Outcomes Research Institute (PCORI) to fulfill its mandate as outlined in the US Affordable Care Act (ACA), it must collect a levy known as the PCORI fee.  Research aimed at educating physicians and patients about diagnosis, care, and treatment is funded in part by the fee.  For certain health insurance policies and self-insured health plans, the cost is required.  Through Form 720, the Quarterly Federal Excise Tax Return, employers or plan sponsors with applicable health plans send the PCORI fee to the IRS each year.  Organizations who want to comply and avoid fines must have a solid understanding of this cost.

 

PCORI costs are due from health policy issuers and sponsors of self-insured health plans, including HRAs (Health Reimbursement Arrangements).  Employers who offer certain FSAs or self-funded health care may also be subject to this charge.  The insurance policy must be carefully read by employees in order to ascertain who is responsible for making payments.  Many employers mistakenly believe that this tax only applies to large corporations.  Included in this fabrication are small enterprises with appropriate blueprints.

 

 

The PCORI charge amount is adjusted annually by the IRS; in 2024, it averaged $3.22 per policyholder.  This sum is determined by averaging the policy's insured lives throughout the course of the year.  The rate indicated above is $3.22 for the October 2023–September 2024 timeframe.  To ascertain the number of covered lives, employers may choose to employ multiple techniques, including the Form 5500 Method, the Actual Count Method, and the Snapshot Method.  But they have to pick one that will give them the best information and ensure that the payment is processed smoothly.

 

  

IRS Form 720 is used for quarterly reporting and payment of the PCORI fee, although it can also be used for annual reporting.  For the majority of plans, it is the period from the conclusion of the plan year until July 31.  Your PCORI charge is due by July 31, 2025, for example, if your plan year concluded on December 31, 2024.  In order to avoid incurring interest or penalties from the IRS, you must timely file this fee.  Employers must mark this day on their compliance calendar in order to stay informed.

 

 

The first step for a stress-free approach is for employers to review the specifics of their plan year, verify the number of covered lives, and download the most recent Form 720 from the IRS website.  Are you certain that your calculations and mode of payment are accurate?  People typically pay their taxes using the Electronic Federal Tax Payment System (EFTPS).  Keep an optimistic outlook in addition to depending on a professional to pay non-resident aliens or utilizing a convenient way for excise tax compliance.  Maintaining IRS compliance each year will be made easier for your company if you are organized and knowledgeable.