Understanding the PCORI Fee: What Employers Offering Health Insurance Need to Know

As an employer offering health insurance to your employees, it’s important to stay informed about the various regulatory requirements that impact your benefits program. One such requirement is the PCORI fee, which supports patient-centered research and helps improve healthcare decision-making. In this blog post, we’ll provide an overview of the PCORI fee, what you can expect over the coming months, and the key deadlines for 2023.

What is the PCORI Fee?

The PCORI fee, or the Patient-Centered Outcomes Research Institute fee, was established as part of the Affordable Care Act (ACA). Its purpose is to fund research that compares the effectiveness and outcomes of different medical treatments and interventions. This research aims to provide valuable information to patients, caregivers, and healthcare providers, allowing them to make informed decisions about their healthcare options.

What to Expect in the Coming Months

If you offer health plans, it’s important to be aware of the PCORI fee and its associated requirements. Here’s what you can expect over the coming months:

  1. Calculation of the Fee: The PCORI fee is calculated based on the average number of covered lives under your applicable health plan. Covered lives include both employees and their dependents who are enrolled in the plan. To determine the fee, you’ll need to multiply the average number of covered lives by the applicable fee amount.
  2. Reporting and Payment: Employers are responsible for reporting and paying the PCORI fee to the IRS using Form 720, “Quarterly Federal Excise Tax Return.” This form is used to report and pay various excise taxes, including the PCORI fee. The fee is generally due by July 31st of the year following the end of the plan year.

Deadlines for 2023

To ensure compliance with the PCORI fee requirements, it’s crucial to be aware of the deadlines for 2023. Here are the key dates to mark on your calendar:

  1. Payment Due Date: The PCORI fee for the plan year ending in 2022 is due by July 31, 2023. This is the deadline to report and remit the fee to the IRS using Form 720.
  2. Filing Form 720: When filing Form 720, be sure to include the relevant information regarding your health plan, such as the plan name, Employer Identification Number (EIN), plan year, and the number of covered lives. Calculate the fee accurately and report it accordingly.

Staying informed about regulatory requirements like the PCORI fee is essential for employers offering health insurance. By understanding the purpose of the fee, what to expect in the coming months, and the deadlines for 2023, you can ensure compliance and fulfill your obligations. Remember to consult with a tax advisor or refer to the latest IRS guidelines for any specific questions or clarifications regarding the PCORI fee or other tax-related matters.

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