
What Are PCORI Fees?
PCORI fees, or Patient-Centered Outcomes Research Institute fees, are charges imposed on health insurers and plan sponsors of self-insured health plans to fund the Patient-Centered Outcomes Research Institute. The institute is tasked with advancing comparative clinical effectiveness research to help consumers, clinicians, purchasers, and policymakers make informed health decisions. Essentially, PCORI fees are meant to support research that can help improve health outcomes and enhance the quality of healthcare in the United States.
Who Needs to Pay PCORI Fees?
PCORI fees are applicable to both fully insured and self-insured health plans. If you have a fully insured health plan, the insurer pays the fee as part of the premium. However, for self-insured plans, including health reimbursement arrangements (HRAs) and certain flexible spending accounts (FSAs), the responsibility to pay these fees falls on the plan sponsor, typically the employer.
How Are PCORI Fees Calculated?
The calculation of PCORI fees depends on the number of covered lives under the plan and the applicable rate decided by the IRS for that particular year. For plan years that end on or after October 1 and before October 1 of the following year, the rate may change. The IRS provides methods to calculate the average number of lives covered under a policy, which includes actual count method, snapshot method, and Form 5500 method for plan sponsors.
When Are PCORI Fees Due?
PCORI fees are paid annually and the due date for payment is July 31 of the year following the last day of the plan year. This means if your plan year ends on December 31, 2021, the PCORI fee for that plan year is due by July 31, 2022. Payment is made using IRS Form 720, which is also used for reporting and paying the federal excise tax.
What Happens If You Don’t Pay PCORI Fees?
It’s crucial to comply with PCORI fee requirements as failure to do so can result in penalties. If the PCORI fees are not paid on time, the IRS may impose interest and penalties for late payment, which can accumulate until the full amount is paid.
HR Considerations for Managing PCORI Fees
For Human Resources departments, managing PCORI fees involves several key areas of focus:
Accurate Record-Keeping
It is essential for HR professionals to maintain accurate records of all employees and dependents covered under their health plans throughout the plan year. This data is crucial for calculating the correct PCORI fee.
Staying Informed on Regulatory Changes
The guidelines and rates for PCORI fees can change. HR must stay updated on any regulatory changes to ensure compliance and accurate fee calculation and payment.
Collaborating with Financial Teams
Effective communication and collaboration between HR and the finance department are essential to ensure that PCORI fees are budgeted for and paid on time.
Final Thoughts
PCORI fees are an important aspect of healthcare funding in the United States, contributing to research that aims to improve healthcare outcomes. For employers and HR professionals, understanding and managing these fees is not only a regulatory requirement but also a contribution towards enhancing the effectiveness of healthcare interventions. Ensuring timely and correct payment of PCORI fees is critical, and involves accurate record-keeping, staying informed on any updates regarding fee rates and deadlines, and collaborating within the organization for smooth fiscal management.