PCORI Fees on Providers of Health Coverage Extended 10 Years

| 2/13/2020
PCORI Fees on Providers of Health Coverage Extended 10 Years

Congress recently extended for another 10 years the Patient-Centered Outcomes Research Institute (PCORI) fees under IRC Sections 4375 and 4376. The fees apply to issuers of certain health insurance policies and employers that self-insure employee health coverage.

The PCORI fees, along with the PCORI trust established under IRC Section 9511, which is funded in part by the fees, were enacted under the Affordable Care Act in 2010. As originally enacted, the fees were applicable for policy years (insured plans) and plan years (self-insured plans) ending on dates falling on or between Oct. 1, 2012, and Sept. 30, 2019. However, the Further Consolidated Appropriations Act, 2020, enacted on Dec. 20, 2019, extends the PCORI fees such that applicable health insurance issuers and applicable employers continue to be subject to the fees for policy and plan years ending on dates falling on or between Oct. 1, 2019, and Sept. 30, 2029.

Sign up to receive the latest tax insights as well as tax regulatory and administrative updates.

Reporting and payment of PCORI fees

Taxpayers subject to the fees must pay them and report the fees on Form 720, “Quarterly Federal Excise Tax Return.” PCORI fees are due on an annual basis by July 31 of the year following the policy or plan year to which the fees apply. Even though the Form 720 is a quarterly return, those subject to the PCORI fees report and pay only once each year by the July 31 due date. PCORI fees for policy and plan years ending in 2019 are due by July 31, 2020. The 2019 fees are $2.45 per person for the “average number of lives covered” as calculated under permitted methodologies. The fees are adjusted for inflation.

Immediate impact of fee extension

As a result of the extension of the PCORI fees, affected businesses now should consider two things:

  • The fee has been extended. Therefore, policies and plans with years ending after Sept. 30, 2019, the prior expiration date, and before Jan. 1, 2020, must report and pay 2019 PCORI fees by July 31, 2020.
  • Businesses should take into account for tax and, potentially, financial statement purposes that the fees and related reporting will continue to be required until July 31, 2030, unless further extended.

Looking ahead

Now is a good time for taxpayers to consider whether any changes in health coverage under policies or plans affect the application of the fees. Taxpayers subject to the fees should consider reexamining which methodology under U.S. Department of the Treasury regulations best applies to calculate their fees based on their specific covered population. In addition, taxpayers might wish to consult with their tax advisers on the PCORI fee requirements for payment and filing Form 720.

Contact us

Our experienced tax professionals can help you tackle your most pressing tax challenges. Contact the Crowe tax team today.
Veena Murthy
Veena Murthy
Principal, Washington National Tax