PCORI Fees

What are PCORI Fees? 

Patient-Centered Outcomes Research Trust Fund Fee is levied from health insurance policy providers and self-insured health plan sponsors. 

The Patient-Centered Outcomes Research Institute is supported in part by the PCORI Fees. By fostering clinical effectiveness research, the institution assists patients, physicians, purchasers, and legislators in making more educated healthcare decisions.

The quarterly Federal Excise Tax Return Form 720 must comply with the yearly fee for settlement. In addition, specific insurance policies with insurance years expiring on September 30, 2012, and before October 1, 2029, as well as eligible self-insured healthcare plans, are subject to the PCORI fees.

How are The PCORI Fees Calculated?

The PCORI charge is calculated by determining the average number of people covered by the policy or the plan for the policy year respectively and charging it to the health insurance provider or the plan's sponsor.

On December 6, 2012, theDepartment of Health and Human Services released the final regulations for the PCORI charge. According to the final rules, issuers may choose from four different methods when calculating the average number of lives covered by a specified health insurance policy during a policy year. They are: 

• The actual count method
• The member months method
• The snapshot method
• The state-form method

The average number of lives covered by an applicable self-insured health plan for a plan year must be calculated using one of three ways, including the actual count technique, the snapshot approach, or the Form 5500 method, as specified in the final regulations. 

The plans are explained below:

• Actual Count Method:Determine the number of lives insured for each day in the plan year, then divide that figure by the total number of days in the plan year.
• The Snapshot Method:This method involves tallying the number of insured individuals on a single day of the month or quarter and dividing that figure by the number of days a tally was taken.
• Form 5500 Method: The sum of the participant totals at the plan's inception and expiration is used to calculate the average number of covered lives for the year.

When an organization offers both a self-funded and an HRA-integrated group medical plan, calculating covered lives may be affected by two different sets of criteria.

• If a single plan sponsor is responsible for more than one self-funded health plan covering the same plan year, all those plans can be combined into a single fee assessment, which means that there is only one tally for all the protected lives.
• Employers provide their workers with health reimbursement arrangements (HRAs) as part of a fully insured medical plan. 

What Kinds of Health Insurance Plans Must Pay the PCORI Fee?

Health insurers' fully funded and employer-provided self-financed plans are subject to the PCORI cost. The following are included in this category:

• Insurance under the COBRA Plan
• Policy options for comprehensive healthcare coverage
• Medical expenses payment plan 
• Insurance for emergencies and expensive medical care
• Short-term objectives
• Retirees' essential health benefits
• Separate dental and vision insurance

What are the Few Exceptions to the PCORI fees?

There are several government programs that are exempt from the PCORI fees. These include

• Medicaid
• Medicare
• Children's Health Insurance Program
• Programs established by federal law to provide medical care to members of the Armed Forces and veterans.

Plans that exclusively provide vision or dental coverage and most flexible spending accounts are examples of exceptions to the PCORI cost, excluded in traditional health insurance or self-insured plans. 

In addition, the PCORI fee does not apply to health insurance policies or self-insured plans whose benefits are confined to programs for employee assistance, disease control programs, or wellness programs.