The IRS recently provided notice 2020-44 announcing the new PCORI fees for plan years from October 2019 through October 2020. The new fee is an increase of $0.09, from $2.45 to $2.54. While this amount is important to know, it is essential to understand what PCORI fees are and how they affect your ACA Employer Reporting.
PCORI stands for Patient-Centered Outcomes Research Institute. The Patient-Centered Outcomes Research Trust Fund fee is a tax on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans. It assists in funding the institute. Imposed by §§ 4375 and 4376 of the Internal Revenue Code, the fee initially covered policy plan years beginning September 30, 2012, and ending before October 1, 2019. The Further Consolidated Appropriations Act of 2020 extends the period to policy and plan years ending before September 30, 2029. Therefore, there is an end in sight for the PCORI fees, but it is at least another nine years away. A lot can occur between now and then, so the thing to note for this year is the increase to $2.54.
PCORI fees apply to health insurers and plan sponsors offering the insurance plans mentioned above and is calculated based on the number of lives covered through the policy year. The fees must be submitted electronically via Form 720 by the last day of July each year. Final regulations state PCORI fees also apply to short-term plans of applicable self-insured health plans, i.e., plans running fewer than 12 months.
Employers who, for whatever reason, fail to pay or properly calculate their PCORI fees are subject to fines from the IRS. If the Treasury Inspector General's report from last week is any indication, the IRS will be coming after those fees with a vengeance. This is the reason it is important to seek outside assistance for ACA reporting.
Accurately determining the number of lives considered for payment is tricky. If PCORI fees apply to your organization or your clients, reach out to Medcom's ACA department to learn more about our full-service solution. We can guarantee that the risk of IRS fines is growing exponentially; Medcom is here to help you secure accurate and timely reporting for all your ACA tax documentation.