Health insurers and self-insured health plan sponsors pay PCOR fees (Patient-Centered Outcomes Research fees). These fees are used to fund research on patient-centered outcomes. PCOR fees are considered an excise tax and are reported on IRS form 720. Plans are required to file Form 720. They must pay the tax by July 31 following the end of the calendar year in which the plan year ends. These fees were originally scheduled to expire with the filing of the 2018 plan year. However, on December 20, 2019, the Further Consolidated Appropriation Act extended the fee for 10 more years.
Insurance companies are responsible for paying the PCOR fee for any group health plan sponsored by your company. Employers are responsible for paying the PCOR fee on self-insured plans.
Self-Insured plans include Health Reimbursement Arrangements where the company decides how much it will put in a plan to reimburse employees for actual medical expenses incurred. Self-insured plans generally do not include Health Savings Accounts where the employee sets aside a portion of their pay, tax free, to cover projected medical expenses.
The PCOR fee is $2.45 multiplied by the average number of covered lives for a policy or plan year ending before October 1st. If your policy plan year ends on or after October 1, 2019 and before October 1, 2020, the fee is $2.54, multiplied by the average number of covered lives. You can determine the average number of covered lives for self-insured plans using 3 different methods.
If you would like us to assist you in calculating the average number of lives or completing and filing Form 720, please feel free to contact us. We’d be happy to help.