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One of the most important questions for plan sponsors is whether their plan is subject to the PCORI fee. The Patient-Centered Outcomes Research Institute fee is a required fee created under the Affordable Care Act. Whether or not your plan is subject to this fee is pertinent to you for rigor in compliance and to avoid penalties from the Internal Revenue Service.

The PCORI fee is imposed by the federal government as an excise tax on issuers of specified health insurance policies and sponsors of applicable self-insured health plans. This fee funds the Patient-Centred Outcomes Research Institute, which will conduct comparative effectiveness research that will facilitate the making of informed health decisions by patients.

Whether your plan is subject to the PCORI fee depends on the type of plan you maintain. Generally, these are the types of plans that would be liable for a PCORI fee:

* Fully insured group health plans: The health insurance issuer is responsible.

* Self-insured health plans: The plan sponsor, usually the employer, must pay the fee.

* Multiple employer welfare arrangements (MEWAs) may also fall under PCORI liability depending on plan structure.

Specific plans are exempt from the PCORI fee-for example:

Standalones dental and vision plans Health Reimbursement Arrangements that are excepted benefits Plans that provide only excepted benefits under HIPAA 

You have to answer these questions to determine whether the plan in question is subject to the PCORI fee:

1. Is your plan self-insured or fully insured?

2. Does it provide major medical coverage or merely limited benefits?

3. Are you the plan sponsor or policy issuer? 

Applicable entities must report and pay the PCORI fee annually using IRS Form 720. The deadline is July 31 following the end of the plan year. The amount will depend on the average number of lives covered being assessed by the applicable rate per year adjusted annually for inflation.

Violating the PCORI reporting requirement may lead to penalties or an audit. Check to ensure that your benefits administrator, HR team, or CPA has properly assessed whether your plan is subject to these requirements. Use IRS guidelines, stay updated on rate changes, and file on time. 

If your organization sponsors or issues a health plan, you need to first check for PCORI applicability for compliance. When in doubt, consult with a tax advisor or benefits professional to help ensure that you are meeting your ACA obligations.