Over the past several years, RKL has reminded businesses that the deadline for the annual PCORI fee is July 31. In addition to alerting businesses to this annual due date, this year we also highlight the new fee amount for 2015 calendar year plans.
PCORI fee defined
Named after the Patient-Centered Outcomes Research Institute it supports, the PCORI fee is imposed on businesses with self-insured health and welfare plans and is used to fund comparative clinical effectiveness research. Companies that meet the criteria must submit the PCORI fee to the IRS by July 31 each year, via Form 720.
The first PCORI fees were applied to plan years ending on or after October 1, 2012, and will continue to be applied annually through plan years ending on October 1, 2019. In other words, for calendar year plans, the fee is effective for 2012 through 2018.
Who is charged the PCORI fee, and who is not?
Plan sponsors of applicable self-insured health and welfare plans are charged the PCORI fee, including plans that offer a health reimbursement arrangement (HRA) and possibly flexible spending account (FSA) options. To learn more, check out our detailed breakdown of situations where the PCORI fee does and does not apply.
Why did the PCORI fee amount go up from last year?
Initially set at a flat $1 or $2 fee, the PCORI fee starting with plan year 2014 has risen based on increases in the annual projected per capita amount of National Health Expenditures, set by the U.S. Department of Health and Human Services.
For this year’s deadline, the PCORI fee is set at $2.08 or $2.17 per life covered, depending on the plan year end date:
- Plans that ended on a date between January 1 and September 30, 2015, must submit to the IRS payment equaling the average number of lives covered under the plan multiplied by $2.08 no later than July 31, 2016.
- Plans that ended on a date between October 1, 2015 and December 31, 2015, must submit to the IRS payment equaling the average number of lives covered under the plan multiplied by $2.17 no later than July 31, 2016.
It is important to note that there is no extension of the July 31 filing deadline.
How do I calculate my company’s PCORI liability?
According to the IRS, there are three ways to calculate the average number of lives covered: the actual count method, the snapshot method and the Form 5500 method. Your RKL advisor can help identify the best method for your company and ensure proper calculation.
More information or assistance with PCORI
Unsure about your business’ PCORI requirement? Need assistance calculating the fee? Contact your RKL tax advisor or one of our local offices – we are ready to help you determine and ensure compliance.
Contributed by Ethel A.M. Nawrocki, CPA, Principal in RKL’s Tax Services Group. Ethel has 25 years’ experience providing tax, accounting and consulting services to the manufacturing, wholesale, distribution, construction and real estate rental industries.