PCORI Fee Update

In late December 2021, the IRS issued Notice 2022-04, providing the updated rate for Patient-Centered Outcomes Research Institute (“PCORI”) fees for plan years that end on or after October 1, 2021, and before October 1, 2022.

The Affordable Care Act (ACA) imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the PCORI fee.

The fee is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year. IRS Notice 2020-84 provided that the adjusted applicable dollar amount for policy years and plan years that ended on or after October 1, 2020, and before October 1, 2021, is $2.66.

Notice 2022-04 provides that the adjusted applicable dollar amount for policy years and plan years that end on or after October 1, 2021, and before October 1, 2022, is $2.79.

The PCORI fee is filed using the Quarterly Federal Excise Tax Return (IRS Form 720). Although Form 720 is a quarterly return, PCORI Form 720 is filed annually only, by July 31. Plan sponsors should apply the applicable PCORI fees and file Form 720 corresponding to policy or plan years ending from January 1, 2021, to December 31, 2021, by July 31, 2022.

For more information regarding PCORI fees in general, please refer to IRS Code Sections Internal Revenue Code Sections 4375 and 4376.