The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined
by regulations) and the plan or policy year end date. This year, employers will pay the fee for plan years ending in 2024.
The fee is due by July 31, 2025 and varies based on the applicable plan year as follows:
• $3.22 per year per participant for plan year ending on or after October 1, 2023, and before October 1, 2024.
• $3.47 per year per participant for plan years ending on or after October 1, 2024, and before October 1, 2025.
The fee generally applies to ALL group health plans and coverage, including:
- Accident and Health
- Major Medical
- COBRA
- Retiree-Only Health or Major Medical
- Health Reimbursement Arrangements (HRAs)
That Are Not Excepted Benefits
- Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
The fee generally does NOT apply to the following group health plans:
- Excepted Benefit HRAs (EBHRAs)
- Standalone Dental or Vision
- HIPAA-Excepted Benefits
- Plans that do not provide significant benefits for medical care or treatment (e.g., Employee Assistance, Disease Management, Hospital Indemnity, Disability Income, Accident-Only, and Well-Being Programs)
- Stop-Loss Insurance Policies
- Health Savings Accounts (HSAs)
Excepted benefit plans are exempt from the PCORI fee. ERISA § 733 and I.R.C. § 9832 established four categories of excepted benefits as follows:
- Benefits that are generally not health coverage (e.g., Workers’ Compensation and Accidental Death and Dismemberment Coverage)
- Limited Scope Excepted Benefits that are provided under a separate policy and are not an integral part of a group health plan (e.g., Long-Term Care, Standalone Dental and Vision Coverage)
- Non-Coordinated Excepted Benefits that are provided under a separate policy where there is no coordination between the benefit and any exclusion of such benefits under any group health plan maintained by the same employer, and the benefits are paid regardless of whether benefits are provided under any group health plan of the same plan sponsor (e.g., Cancer Coverage, Hospital Indemnity)
- Supplemental Excepted Benefits that are supplements to Medicare, Tricare, or similar coverage and are provided under a separate policy (e.g., Medicare Supplement)
Benefits are not an integral part of a group health plan if participants can decline or opt out of coverage, and claims for the benefit are administered under a separate contract from other benefits.
An HRA that is integrated with another self-insured plan sponsored by the same employer (e.g., Major Medical Plan or High Deductible Health Plan) is not subject to a separate fee. If, however, the HRA stands alone, the HRA is integrated with an insured plan, or the HRA is integrated with a different sponsor’s self-insured plan, then the HRA plan sponsor must calculate and pay the fee.
Payment is due by July 31 following the calendar year in which the plan year ends. Use IRS Form 720, Quarterly Federal Excise Tax Return.
Explanation of Counting Methods for Self-Insured Plans
Plan Sponsors may choose from three methods when determining the average number of lives covered by their plans. Actual Count method. Plan sponsors may calculate the sum of the lives covered for each day in the plan year and then divide that sum by the number of days in the year.
Snapshot method. Plan sponsors may calculate the sum of the lives covered on one date in each quarter of the year (or an equal number of dates in each quarter) and then divide that number by the number of
days on which a count was made. The number of lives covered on any one day may be determined by counting the actual number of lives covered on that day or by treating those with self-only coverage as one life and those with coverage other than self-only as 2.35 lives (the “Snapshot Factor method”).
Form 5500 Method
Sponsors of plans offering self-only coverage may add the number of employees covered at the beginning of the plan year to the number of employees covered at the end of the plan year, in each case as reported on Form 5500, and divide by 2. For plans that offer more than self-only coverage, sponsors may simply add the number of employees covered at the beginning of the plan year to the number of employees covered at the end of the plan year, as reported on Form 5500.
Special Rules for HRAs
The plan sponsor of an HRA may treat each participant’s HRA as covering a single covered life for counting purposes, and therefore, the plan sponsor is not required to count any spouse, dependent or other beneficiary of the participant. If the plan sponsor maintains another self-
insured health plan with the same plan year, participants in the HRA who also participate in the other self- insured health plan only need to be counted once for purposes of determining the fees applicable to the
self-insured plans.
