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Employers and plan sponsors need to prepare for their timely and compliant reporting of the PCORI (Patient-Centered Outcomes Research Institute) fee as the July 2025 deadline approaches.  According to the Affordable Care Act (ACA), the PCORI fee is the amount of money utilized for research that is subsequently used to help patients and providers make decisions.  It is crucial for employers, who sponsor some health plans under their control, to be well-informed about the requirements prior to the deadline.  In addition to allowing them to avoid penalties, this will streamline the filing process.

 

 

Many health insurance policy issuers and a small number of plan sponsors of applicable self-insured health plans are simultaneously concerned about the PCORI cost.  In other words, you are required to pay this fee if you are an employer with a self-funded health plan that includes HRAs (Health Reimbursement Arrangements).  According to the aforementioned remark, a fully insured plan can be sure that this procedure won't be disturbed; in the event of self-insured arrangements, the employer is more concerned because they should be the ones to file IRS Form 720 and pay the precise tax amount.

 

 

By July 31, 2025, the IRS anticipates receiving payment for the PCORI fee.  Once more, this payment must be reported using IRS Form 720 (Quarterly Federal Excise Tax Return).  The PCORI charge is paid once a year in the second quarter, even though this form is used to file taxes on a quarterly basis.  Naturally, the tax burden is determined by the IRS-set relevant rate and the number of covered lives in a given year.  Undoubtedly, the funds for the health plans that expire in 2024 will be repurposed to cover price increases as needed.

 

 

The Actual Count Method, Snapshot Method, and Form 5500 Method are the most widely used of the many IRS-approved techniques for determining the average number of people covered by a health plan.  Employers should carefully review their paperwork before selecting the technique that best suits their plan data, as this will decide the amount to be paid.  Calculation errors could lead to an underpayment and potential IRS penalty.

 

 

Planning must begin well in advance of the July 31, 2025, PCORI fee deadline.  Employers must compile all the information, consult with their tax consultants, and ensure that everything is accurate.  Employers can save time and reduce the amount of laborious work by e-filing with the IRS through a reliable operational service.  The right strategy is to act early and maintain the plan in compliance with regulations in order to prevent financial penalties for missing the deadline or filing the documents wrong.