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In order to support healthcare outcomes research, the Affordable Care Act's (ACA) insurance reform provisions impose a statutory fee known as PCORI (The Patient-Centered Outcomes Research Institute).  Every year, employers who finance self-insured health plans must file Form 720 and pay the PCORI charge by a certain date.  You can avoid penalties and maintain compliance with the IRS by being aware of and adhering to this filing obligation.

 

Some companies are not required to pay the PCORI charge.  Employers who provide self-insured or health reimbursement arrangement health plans are typically held accountable.  In most cases, the insurer's insurance is adequate for fully covered policies.  It is your responsibility to determine and submit the annual fee on IRS Form 720 by the deadline if your company provides the coverage.

For plans ending in the prior calendar year, the PCORI filing date is typically July 31st of the current year.  Therefore, the deadline for filing and paying for the plan year ending in 2024 is July 31, 2025.  To prevent missing the deadline, you must mark this date as a reminder on your compliance calendar.  Late filers may be subject to punitive actions from the IRS, including interest and penalties.

The IRS updates the PCORI charge every year based on inflation.  The IRS publishes the new fee rate every year.  The cost that must be paid for each covered life during the October 1, 2023, to September 30, 2024, period is $3.22.  The actual count, snapshot, or Form 5500 method are the three IRS-approved ways that employers can utilize to precisely count the number of employees.

Employers should begin preparing at least one month before the PCORI filing date to ensure compliance.  Employers can compile information about their covered lives, select a counting technique, and accurately complete IRS Form 720.  To ensure there are no mistakes, employers might use tax software or expert services.  Finally, but just as importantly, timely file delivery enhances your reputation as a compliance individual while also protecting you from penalties.