The Affordable Care Act imposes an annual fee called the Comparative Effectiveness Research Fee.

What is the Patient-Centered Outcomes Research Trust Fund fee?

PCORI, or Patient-Centered Outcomes Research Institute, was created by the Patient Protection Affordable Care Act (ObamaCare) to support clinical effectiveness and is funded in part by fees paid by health insurance carriers and health plan sponsors such as employers who provide an HRA.

Who Pays the PCORI Fee?

For HRAs, the Plan Sponsor (the employer) must pay a fee for each covered employee. This fee is due July 31st of the calendar year following the end of the plan year being reported. The fee is remitted using IRS Form 720, the Quarterly Federal Excise Tax Return.

To see the fee schedule, please click here

Each applicable employer will have to make a check payable to the “United States Treasury Department” and mail to the below address.

Mailing Address:

Department of the Treasury

Internal Revenue Service

Cincinnati, OH 45999-0009

The fees for 2018 are:

To see the fee schedule, please click here

Which individuals are taken into account for determining the lives covered under a applicable self-insured health plan (HRA)?

Under the HRA, the fee calculation is determined based on the number of participants enrolled in the HRA. This means that dependents and any other beneficiaries can be ignored.Which individuals are taken into account for determining the lives covered under a applicable self-insured health plan (HRA)?

What is OCA doing to assist your organization?

Legally, OCA cannot remit and pay the PCORI fee on behalf of the employer. As a result, as a value added service OCA will determine (every year) the fee amount each employer owes. The fee can be determined using calculation methods offered by the IRS.

Example HRA PCORI Fee Calculation:

ABC company has 20 enrolled HRA Participants (each have family Coverage), which consist of a total life count of 50 lives. The plan ends on 12/31/17. The employer PCORI fee would be (20 Employees X $2.39) $47.80. This is based on the 20-participation life count. Again, under the HRA, the dependents and beneficiaries do not count towards the fee calculation. This fee will be due July 31, 2018.

How will OCA be calculating your fee?

OCA used the “Actual Count Method to determine the fee for each applicable employer. Remember, the fee is only for the participant. It does not factor in any dependents. Actual Count Method: A plan sponsor may determine the average number of lives covered under a plan for a plan year by adding the totals of lives covered for each day of the play year and dividing that total by the total number of days in the plan year. OCA will issue a report by mid June of each year identifying the amount owed. Employers should consult with their tax consultant to review the IRS Form 720.

Failure to Pay the PCORI Fee

The fee is imposed on “plans” not individuals (shareholders are not relevant at all) and the penalties set forth in U.S. Code § 6651 would apply if you don’t pay the fee.  Under 6651, there is a penalty equal to 5 percent of the unpaid PCORI fee for each month or part of a month that a return is late, but not greater than 25 percent of the unpaid PCORI fee. Penalties may not apply if the failure is due to reasonable cause and not due to willful neglect but reasonable cause is a tough standard to satisfy.