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The PCORI fee which simply means Patient-Centered Outcomes Research Institute fee is an excise tax imposed under the Affordable Care Act (ACA). This helps to fund comparative clinical effectiveness research which will assist patients and providers to make informed health choices. For either an employer sponsoring a self-insured health plan or a provider of specific health insurance policies, it is important to understand how to go about the PCORI fee to be IRS compliant.

The federal excise tax known as the PCORI fee has to be paid every year by certain health insurance policies issuers and sponsors of self-insured health plans. It finances research endeavors seeking comparisons between medical treatments or interventions to improve health outcomes.

* Defined by IRC Section 4376 and 4377

* Paid using IRS Form 720 (Quarterly Federal Excise Tax Return)

* Finances patient-centred clinical research initiatives

The obligation to pay the PCORI fee is on:

* Health insurance providers

* Employers with self-funded health plans

* Multiple employer welfare arrangements (MEWAs)

* Specified health plans, except for dental and vision, if the excepted benefits rules do not apply.

Even nonprofit and government bodies are not spared with their self-insured plans. 

The PCORI fee is determined on the basis of average covered lives in the plan year. This will include those employees who have dependents, retirees, and even COBRA beneficiaries covered on the plan. 

Therefore, there are three methods accepted for counting covered life numbers:

1. Actual Count Method

2. Snapshot Method

3. Form 5500 Method

The rate of these fees keeps changing every year and is updated annually by the IRS through official notices. For instance, for plan years ending between October 2023 and September 2024, the fee would be $3.22 per covered life. 

PCORI fee due on July 31 of the year immediately following the end of the applicable plan year. Reporting is done using IRS Form 720, filed under the second quarter, even if the organization does not ordinarily file quarterly excise taxes.

Failure to comply with such obligations could attract penalties and interest. 

The PCORI fee, apart from compliance, also helps in something bigger in public health. It funds evidence-based research, allowing even patients and doctors to assess the viability of treatment options. Employers and insurers complying with this requirement also contribute to the advancement of patient care and outcomes research within the US. 

Understanding the PCORI fee not only fulfills compliance but also demonstrates participation in a national effort to improve healthcare quality. Always remember to calculate correctly and file Form 720 on time while staying abreast of annual changes by the IRS.