Reminder: PCORI fee payments are due soon

Fees that fund a research institute created by the Affordable Care Act are due on Aug. 2.

The ACA health care reform law requires insurance issuers and self-insured plan sponsors to pay Patient-Centered Outcomes Research Institute fees (PCORI fees). Issuers and plan sponsors are typically required to pay those PCORI fees by July 31 each year.

But since July 31 falls on a Saturday this year, the PCORI fee payment for plan years ending in 2020 is instead due on Aug. 2 2021.

The fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return). In general, PCORI fees are assessed, collected and enforced like taxes. The PCORI fee applies separately to “specified health insurance policies” and “applicable self-insured health plans,” and is based on the average number of lives covered under the plan or policy.

Using Part II, Number 133 of Form 720, issuers and plan sponsors are required to report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans. That number is then multiplied by the applicable rate for that tax year ($2.54 for plan years ending on or after Oct. 1, 2019, and before Oct. 1, 2020). The fees for specified health insurance policies and applicable self-insured health plans are then combined to equal the total tax owed.

The institute was created by the Affordable Care Act to conduct research on the effectiveness of medical treatments and strategies so patients, providers, employers and insurers can make better-informed health decisions.