The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-insured plan sponsors in order to fund comparative effectiveness research. These fees are widely known as Patient-Centered Outcomes Research Institute fees (PCORI fees).
On September 18, 2014, the Internal Revenue Services (IRS) published Notice 2014-56, which provides the adjusted amounts after the PCORI fee change for plan years ending on or after October 1, 2014 and before October 1, 2015 (that is, 2014 for calendar year plans). For plan years ending on or after October 1, 2014, and before October 1, 2015, the PCORI fee amount is $2.08 multiplied by the average number of lives covered under the plan.
In the future, the IRS will publish the adjusted amount for plan years ending on or after October 1, 2015 and before October 1, 2019, taking into account any PCORI fee change.
Overview of PCORI Fee Change
The PCORI fees apply for plan years ending on or after October 1, 2012, but do not apply for plan years ending on or after October 1, 2019. For calendar year plans, the fees will be effective for the 2012 though 2018 plan years.
Issuers and plan sponsors must pay PCORI fees annually on IRS Form 720 by July 31 of each year. The fee will generally cover plan years that end during the preceding calendar year.
PCORI Fee Amounts
The PCORI fees are calculated by multiplying an applicable rate for each tax year by the average number of lives covered under the plan. The applicable rate for each tax year is as follows:
- $1 for plan years ending before October 1, 2013 (that is, 2012 for calendar year plans)
- $2 for plan years ending on or after October 1, 2013, and before October 1, 2014
For plan years ending on or after October 1, 2014, the PCORI fee change will be based on any increase in the projected per capita amount of National Health Expenditures.
Under Notice 2014-56, for plan years ending on or after October 1, 2014 and before October 1, 2015, the adjusted PCORI fee amount is $2.08 multiplied by the average number of lives covered under the plan. This amount was calculated based on the percentage increase in the projected per capita amount of the National Health Expenditures published by the U.S. Department of Health and Human Services on September 3, 2014.
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