DBS Digest

Background – Patient Centered Outcomes Research Institute (PCORI) Trust Fund Fees

As part of the Affordable Care Act (ACA), the fee – which applies to group health plans – was implemented to fund research that equips patients and providers with information to assist in shaping well educated health care decisions. Because Health Reimbursement Arrangements (HRAs) are defined as a form of health insurance, they are subject to the fee…which is paid annually and is imposed through 2029.

Who Pays the PCORI Fee?

• The plan sponsor is responsible for paying the fee. For HRAs the plan sponsor is the employer.
• If the HRA is integrated with a fully-insured group health plan, the HRA and the health plan are both subject to the fee. The plan sponsor of the HRA (employer) and the fully-insured group health plan pay the fee separately – even if the persons covered under both are the same.
• If the HRA is integrated with a self–insured group health plan and both plans are maintained by the same plan sponsor, the plan sponsor may pay a single fee for both plans provided they both have the same plan year.
• If the self-insured group health plan and the HRA have different plan years, the fee is calculated on each plan separately.
• If the HRA is a retiree only plan, the plan sponsor (employer) is responsible for paying the fee.
• If the HRA is a stand-alone dental or vision plan, the fee does not apply.

What is the Fee Amount?

PCORI fees for group health insurance plans are based on the number of covered lives; however, for HRAs they are based on the number of covered employees.

• For plan years ending between 10/1/2022 and 9/30/2023 the fee is $3.00 per average number of covered employees.
• For plan years ending between 10/1/2023 and 9/30/2024 the fee is $3.22 per average number of covered employees.

How is the Average Number of Covered Employees Determined/Calculated?

Listed below are two methods that can be used to calculate the average number of covered employees. Plan sponsors can change the calculation method used for different plan years, but must use the same method within the same plan year.

1. Actual Count Method: Take the total number of covered employees on each day of the plan year and divide by the number of days in the plan year.
2. Snapshot Method: Take the total number of covered employees on a single date in each quarter or an equal number of dates in each quarter and divide by four (4) quarters or the number of dates used within each quarter.

To make this process easier for our clients, DBS has an online PCORI Calculator that administrative users can access through A.S.A.P. online. If you are not already an administrative user, please contact your DBS Claim Specialist to set up your online account and begin using this feature.

To Utilize the DBS Online PCORI Calculator:

• Go to dbsbenefits.com and login using your administrative user credentials.
• Select HRA as the Benefit Plan Type from the top menu bar.
• Select the HRA plan year for the fee that is being reported.
• Select PCORI Calculator from the menu on the left and follow the onscreen prompts.

When do Plan Sponsors Report and What Form Should be Used?

The plan sponsor (employer) must file IRS Form 720 (Quarterly Federal Excise Tax Return) annually stating the PCORI fee liability.

• PCORI fees must be paid annually by July 31 of the calendar year immediately following the last day of the plan year. For example, a calendar-year plan ending 12/31/2023 will have their first return annual payment due by 07/31/2024.
• Third Party Administrators (TPAs) are not allowed to act for plan sponsors by filing the return or paying the fees. However, in order to prepare the return and pay the fees, plan sponsors may need to obtain information about the number of covered lives from their TPA.