Jun 11 ,2025
PCORI fee for self-insured employers
PCORI fee for self-insured employers
Understanding PCORI Fees: Essential Information for Self-Insured Employers
Self-insured employers who run benefit programs for their workers must fulfill a number of requirements; if they don't, they are breaking the law regarding health care compliance. These include the temporary excise tax known as the Patient-Centered Outcomes Research Institute (PCORI) fee, which was created by the Affordable Care Act (ACA). Even if it is only a little sum per covered life, it is crucial to understand your obligations regarding this payment in order to avoid penalties and maintain faultless operations.
Why is there a PCORI fee and what is it?
The primary goal of the PCORI fee is to support the Patient-Centered Outcomes Research Institute, a nongovernmental non-profit dedicated to enhancing the quality and applicability of available evidence to help patients, caregivers, and healthcare professionals make health-related decisions. One To put it another way, your contribution will support research aimed at improving healthcare results. The self-insured employers should be responsible for calculating, declaring, and paying the PCORI fee to the IRS directly, while fully-insured plans typically transfer the bill payment to the employer.
How to Determine Your PCORI Requirement: Lives Covered and Relevant Rates
The average number of lives covered under your self-insured health plan during the plan year and the applicable monetary amount for that year are the two main elements that determine the cost that must be paid as PCORI. Guidelines for determining the average number of lives covered are provided by the government organization. These methods include the "actual count method," the "snapshot method," and the "Form 5500 method." You need to pick the approach that works best for you and that you can stick with for the entire plan year. The fee itself is subject to annual revisions; in the 2024–2025 plan years, it was $3.47 per covered life, compared to $3.22 in previous years.
Form 720 and the Deadline as the Primary Tasks for Reporting and Payment
Self-insured employers are required to pay an annual PCORI charge. The Quarterly Federal Excise Tax Return is the more popular name for this yearly return on IRS Form 720. The PCORI fee is only submitted once a year, despite the form being a quarterly return. The deadline for filing and payment is July 31st of the year after the plan year ends. The PCORI charge, for example, must be paid by July 31, 2025, if the plan year ends in 2024. Strict adherence to the required payment and filing schedule is the most typical of the penalties that may result from failing to file or pay accurately and on time, including fines and interest.
Important Concerns and Effective Employer Strategies
Businesses that offer health care through self-insurance must be mindful of other crucial factors in addition to the fundamental needs of computing and presentation. The sponsor is required to pay the PCORI charge; the ERISA plan administrator is not permitted to do so (this exclusion applies exclusively to specific union-affiliated multiemployer plans). In addition, the charge itself is equivalent to a business expense that can be subtracted from the overall tax liability.
Nonetheless, the audit requires the production of detailed records of the members covered by the plan and the cost amounts. In a similar vein, you can be responsible for paying the PCORI charge on the Health Reimbursement Arrangement (HRA) if you also provide one in addition to the medical plan. To guarantee that your company complies with these regulations, you may stay informed about the latest IRS regulations by visiting their website and contacting tax consultants or advisors who specialize in HR and benefit plans.