PCORI Fee Reporting and Payment Due July 31, 2024

Fully insured carriers and most self-insured health plan sponsors must pay annual Patient Centered Outcomes Research Institute (PCORI) fees to the IRS. They are also required to report the same on Form 720 as an excise tax. The payment is due July 31, 2024.

How do PCORI Fees Apply to Different Health Plans?

HRAs & Self-Insured Plans – A Health Reimbursement Arrangement (HRAs) that is integrated with a self-insured health plan is considered part of a single plan, which avoids duplication of fees.

HRAs & Fully Insured Plans – When the HRA is integrated with a fully insured medical plan, the employer plan sponsor submits payment for all employees enrolled in the HRA. The insurer (carrier) submits payments for the same employee who is enrolled in the associated insured plan. Employees only (not dependents) are counted towards calculating the PCORI fees for the HRA that’s integrated with a fully insured medical plan.

FSAs – A Health Flexible Spending Account (FSA) is not subject to the PCORI Fee if it meets the requirements of an excepted benefit under Code §9832(c). A health FSA is considered an excepted benefit if:

The employers make other group health plan coverage (not limited to excepted benefits) available to employees for the year; and

The health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).

The IRS has published a chart that describes more information on the different types of plans subject to the fee.

What are the PCORI Fee Amounts? N-2023-70 (irs.gov)

$3.00 per covered life for plan years ending on or after October 1, 2022, through September 30, 2023 – Filing date July 31, 2024

$3.22 per covered life for plan years ending on or after October 1, 2023, through December 31, 2023 – Filing date July 31, 2024

$3.22 per covered life for plan years ending on or after January 1, 2024, through September 30, 2024 – Filing date July 31, 2025

Are There Penalties for Not Reporting?

The PCORI rules do not contain a specific penalty for failure to report or pay the PCORI fee, but since this fee is considered an excise tax, any related penalty for failure to file a return or pay a tax would seem to apply. Code §6651 includes the penalties for failure to file a return or pay taxes.

The penalty is 5% of the excise tax due for each month or part of a month the return is late, with a cap of 25% of the unpaid tax. However, the minimum penalty for failure to file within 60 days of the due date, including extensions, is the lesser of $100 or the amount of tax owed with the return.

There is also a penalty for failing to pay the excise tax on time. It is equal to .5% of any tax not paid by the due date for each month or part of a month the tax remains unpaid, up to 25% of the unpaid tax.

On top of the penalties, interest can be charged on unpaid excise taxes. In some cases, penalties may be waived if the plan sponsor has reasonable cause and the failure to pay was not due to willful neglect.

In some cases, penalties may be waived if the plan sponsor has reasonable cause and the failure to pay was not due to willful neglect.

Amwins Connect other articles on the PCORI Fee:

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