The IRS has announced an adjustment to the Patient-Centered Outcomes Research Institute (“PCORI”) fee for plan years ending on or after October 1, 2024, and before October 1, 2025. According to IRS Notice 2024-83, the fee will increase to $3.47 per covered life, up from $3.22 for plan years ending in 2024.
IRS Form 720 and PCORI Fees
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Employers sponsoring self-funded health plans and insurance carriers for fully insured plans use the PCORI fee to fund the federal PCORI trust fund. The fee is reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return). The deadline for submitting this form is July 31 of the year following the end of the applicable plan year.
The PCORI fee rates apply as follows:
- $3.22 per covered life for plan years ending January through September 2024.
- $3.47 per covered life for plan years ending October through December 2024.
- $3.47 per covered life for plan years ending January through September 2025.
Employers with fully-insured plans are not directly responsible for PCORI payments. Instead, their insurance carrier is responsible for paying the PCORI fee, though this cost may be reflected in premiums.
Employers sponsoring self-funded plans, including those with self-funded HRAs, are required to calculate and pay the fee directly to the IRS.
For detailed information on calculating the PCORI fee and determining applicability, the IRS provides comprehensive guidance, including a chart which illustrates the various arrangements subject to the PCORI fee.
It’s also worth noting that the PCORI fee, initially set to expire in 2019, was extended by Congress through 2029. Employers should be aware of its ongoing applicability and potential impacts on costs.
If you need assistance with calculating PCORI fees or determining the specific requirements for your plan, please contact one of our employee benefit consultants. Accurate and timely compliance can help avoid potential penalties.
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