Patient-Centered
Outcomes Research Institute Fee (PCORI)
New fee will fund research and consumer-based health decisions
Established by The Patient Protection and Affordable Care Act (PPACA), the Patient-Centered Outcomes Research Institute (PCORI) is charged with examining the “relative health outcomes, clinical effectiveness, and appropriateness” of different medical treatments. The Institute will evaluate existing studies and conduct its own, with funding in part by employer-paid fees.
Initial mandates include a new fee imposed on employers and insurance carriers for seven years, with fee amounts expected to change during that time. Due each July 31st, this fee is now set to affect Clients with Plan years ending 2012 through 2019. If a plan sponsor only maintains a flexible spending account (FSA) or a health reimbursement arrangement (HRA), then the plan sponsor may treat each participant's account as covering a single life. (The plan sponsor is not required to count spouses or other dependents.)
Calculating the Fee
The fee
is equal to the average number of covered lives for the policy year times the
applicable dollar amount.- For policy years ending
on or after Oct. 1, 2012, and before Oct. 1, 2013 - the applicable dollar
amount is $1.
- For policy years ending
on or after Oct. 1, 2013, and before Oct. 1, 2014 - the applicable dollar
amount is $2.
Self-funded
plans may determine the average number of covered lives by using any of the
following methods. Like fully insured plans, plan sponsors must use the same
method consistently for the duration of any year and the same method for all
policies subject to the fee.
- Actual Count – Count the total covered lives for each day of the plan year and divide by the number of days in the plan year.
- Snapshot dates – Count the total number of covered lives on a single day in a quarter (or more than one day) and divide the total by the number of dates on which a count was made. (The date or dates must be consistent for each quarter.)
- Snapshot Factor – In the case of
self-only coverage, determine the sum of: (1) the number of participants
with self-only coverage, and (2) the number of participants with other
than self-only coverage multiplied by 2.35.
- Form 5500 Method – For self-only
coverage, determine the average number of participants by combining the
total number of participants at the beginning of the plan year with the
total number of participants at the end of the plan year as reported on
the Form 5500 and divide by 2. In the case of plans with self-only and
other coverage, the average number of total lives is the sum of total
participants covered at the beginning and the end of the plan year, as
reported on the Form 5500.
Are health insurance policies or self-insured health plans
for tax-exempt organizations or governmental entities subject to the PCORI fee?
Yes. Unless the health insurance policy or self-insured health plan is an exempt governmental program described above, the policy or plan is a specified health insurance policy or applicable self-insured health plan subject to the PCORI fee and, accordingly, the health insurance issuer or plan sponsor is responsible for the PCORI fee.
