It's PCORI fee season, but you already knew that ... right?

For well over a decade now, the start of summer has meant that a certain fee soon comes due and payable to Uncle Sam by many employers. All these years later though, it’s amazing how many calls our human capital professionals still field around this time each year from benefits professionals wanting to know more about “the PCORI fee.” So, let’s take it from the top!

What is it?

The Patient Centered Outcomes Research Institute (PCORI) fee was among the first mandates imposed by the Affordable Care Act (ACA). The fee is paid by certain providers and organizations that manage their own health plans. It helps to support the PCORI, which conducts research on which treatments work best to improve healthcare decisions for all patience, clinicians, buyers and policymakers. The PCORI fee went into effect after Sept. 30, 2012 and though it was originally set to expire in 2019, the fee was subsequently extended and now applies to plan years ending before Oct. 1, 2029. That’s because the period it covers includes plan years that start on Oct. 1 of the current year and end on Oct. 1 of the following year.

How much is the fee?

The amount of the PCORI fee equals the average number of lives – including employees, retirees, spouses and dependents – covered during the plan year multiplied by the applicable dollar amount for the year. For the 2023-2024 plan year, the applicable dollar amount is $3.22 per covered life.

For example, if your company averages 10 covered lives, then your PCORI fee due would equal $32.20. If your company averages 100 covered lives, then your PCORI fee due would equal $322.00.

Who pays this fee?

Who makes the PCORI payment is determined by the health insurance plan funding arrangement. For fully insured plans, it is the issuer of the policy who is most commonly known as the health insurance plan carrier or insurer. For self-funded plans, the plan sponsor must pay the fee. Third-party administrators (TPAs) are not allowed to pay the fee for this type of plan.

Keep in mind that Health Reimbursement Arrangements (HRAs) are considered self-funded health plans and are subject to the PCORI fee. However, special rules apply to HRAs for the purposes of calculating the PCORI fee.