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PCORI Fees: What They Are and How They Affect Employers

By May 12, 2023Insurance
Close up of employer calculating PCORI fees on a calculator.

What Is PCORI?

The Patient-Centered Outcomes Research Institute (PCORI) is an independent, non-profit organization that funds research aimed at evaluating the effectiveness of medical treatments, services, drugs, and practices. To help fund PCORI, the Affordable Care Act (ACA) places a fee on specified health insurance policies and self-insured health plans, known as the PCORI fee. These fees can significantly impact employers, as they are responsible for paying them if they sponsor certain self-insured health plans for their employees.

What Self-Insured Plans Are Subject to the PCORI Fee?

PCORI fees apply to self-insured (or level-funded) health plans with plan years ending on or after October 1st, 2012, and before October 1st, 2029. For a full list of self-insured plans subject to the PCORI fee, and special rules applicable to certain types of plans, view the list here.

It’s worth noting that the PCORI fee is temporary and is set to expire in 2029. However, it’s possible the fee could be extended beyond that date if the government decides to.

How Is the PCORI Fee Calculated for Employers?

The PCORI fee is calculated based on the average number of covered lives an employer has on their sponsored self-insured health plan. The fee must be reported and paid on IRS Form 720 and is due no later than July 31st of the calendar year following the last day of the plan year. 

The fee amount varies depending on the plan year. For plan years ending on or after October 1st, 2021, and before October 1st, 2022, the fee is $2.91 per covered life. For plan years ending on or after October 1st, 2022, and before October 1st, 2023, the fee is $3.00 per covered life. The fee is expected to continue to increase annually until it is set to expire in 2029. 

Impact on Employers

PCORI fees can add up quickly, especially for larger employers with a high number of covered lives. Employers may need to budget for the fees and factor them into their overall healthcare costs. However, PCORI’s research can also benefit employers. The research can provide valuable information about the effectiveness and value of different healthcare interventions, such as medications and procedures, ultimately helping employers make more informed decisions about which employee benefits and wellness programs they offer their employees.

For more information on PCORI fees, how to calculate the number of employees you have, how to fill out IRS Form 720, and more, visit the IRS’s page on PCORI. For a list of FAQs regarding PCORI fees, visit the IRS’s PCORI FAQ document.

Lastly, if you are an employer, and would simply like help with your PCORI fees or group insurance plans in general, contact your MSIG agent or contact us directly at MSIG.