Burr & Forman

07.8.2019   |   Blog Articles, Federal Tax, Tax Law Insights

Ding, Dong, the PCORI Fee is Dead!

Insurance carriers and employer sponsors of health plans were not exactly thrilled with the passage of the Affordable Care Act in 2010.  You might say, the Affordable Care Act was viewed as the “wicked witch.”  Although the Affordable Care Act has managed to survive, the PCORI fee  ̶̶  a limited duration fee applicable to policy and plan years ending after October 1, 2012 and before October 1, 2019  ̶  is gasping its last breath.

The Patient-Centered Outcomes Research Institute (PCORI) is a nonprofit organization created by the Affordable Care Act to support clinical effectiveness research, the goal of which is to help individuals, providers and policy makers make better informed health care decisions.  The “PCORI fee” is an excise tax that funds these research efforts, assessed on the sponsors of self-insured health plans and the insurers of health insurance policies.  The PCORI fee expires with plan and policy years ending after September 30, 2019.  This means that for calendar year plans and policies, 2018 is the final year for which the PCORI fee due.  The fee (as adjusted for inflation) now stands at $2.45 times the average number of covered lives for the year.

IRS Form 720 is used to report the amount of the fee due and to pay the fee.  Unlike other excise taxes reported quarterly on Form 720, the PCORI fee is reported and paid only annually and is due by the July 31 of the year following the calendar year in which the plan or policy year ended.  This means that for calendar year plans and polices, the deadline to file Form 720 for 2018 is July 31, 2019.  The house will have landed squarely on that wicked old witch!

Fiscal year plans and policies may owe the PCORI fee for one additional year.  If the plan or policy year begins on or after January 2, 2018 and on or before October 1, 2019, the final PCORI fee will be due July 31, 2020.

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