Reinstated PCORI Fees Announced

The IRS issued Notice 2020-44, which provides the new fee for full and self-insured benefit plans to pay to fund the Patient-Centered Outcomes Research Institute (PCORI). This fee was initially set to expire for policy and plan years ending after October 1, 2019. However, the Further Consolidated Appropriations Act, enacted on December 20, 2019, extended the termination dates. The fee is now scheduled to terminate for policy and plan years ending after September 30, 2029.

The new fee for plan years ending on or after October 1, 2019, and before October 1, 2020, is $2.54. The fee is to be multiplied by the average number of covered lives on the plan. For fully insured plans, the fee is paid by the carrier, and for self-insured plans, the fee is paid by the plan sponsor.

Transition Relief

Before enactment of the Act extending the fees, due to the anticipated termination of the PCORI fee, issuers of fully-insured plans and plan sponsors of self-insured plans for policy years ending on or after October 1, 2019, and before October 1, 2020, may not have anticipated the need to identify the number of covered lives for this period. Issuers of full-insured plans may continue to use one of the following four methods specified in the regulations to calculate the average number of covered lives for purposes of the fee: the actual count method, the snapshot method, the member months method, and the state form method. Plan sponsors may continue to use one of the following three methods specified in the regulations: the actual count method, the snapshot method, and the Form 5500 method. Also, for policy years ending on or after October 1, 2019, and before October 1, 2020, issuers and plan sponsors may use any reasonable method for calculating the average number of covered lives. If a reasonable method is used to calculate the average number of covered lives for policy years ending on or after October 1, 2019, and before October 1, 2020, then that reasonable method must be applied consistently for the duration of the policy or plan year.

Contact Employers Council or your broker with questions.